Global Scenario of Online Banking

Online Banking

Online banking is the practice of making bank transactions or paying bills via the
Online. Online Banking is one of the few web applications where benefits to
customers and banks are already widely proven. It is now no longer a nice to
have but an impossible to survive without for all banks. Online Banking
refers to systems that enable bank customers to access accounts and general
information on bank products and services through a personal computer (PC) or
other intelligent devices. Online banking means a kind of self-help financial
services provided by the bank for its clients by the medium of Online, including
account information inquiry, account transfer & payment, online payment,
agency services, etc.

Online Banking products and services

Online Banking products and services can include wholesale products for
corporate customers as well as retail and fiduciary products for individual
customers. Ultimately, the products and services obtained through online
banking may mirror products and services offered through other bank delivery
channels. Some examples of wholesale products and services include:

Cash management
Wire transfer
Automated clearinghouse transactions
Bill presentment and payment

Examples of retail and fiduciary products and services include:

Balance inquiry
Funds transfer
Downloading transaction information
Bill presentment and payment
Loan applications
Investment activity
Other value-added services

Other online banking services may include providing online access as an Online
Service provider (ISP). Historically, banks have used information systems
technology to process checks (item processing), drive ATM machines
(transaction processing), and produce reports (management information
systems). In the past, the computer systems that made the information systems
operate were rarely noticed by customers. Today, web sites, electronic bill
presentment and payment systems are an important way for banks to reach
their customers.

Growth in Online Banking

Numerous factors including competitive cost, customer service, and
demographic considerations are motivating banks to evaluate their
technology and assess their electronic commerce and Online banking
strategies. The challenge is to make sure the savings from online banking
technology more than offset the costs and risks associated with conducting
business in cyberspace. Some of the market factors that may drive a banks
strategy towards online banking include the following:

Competition: The competitive pressure is the chief driving force behind
increasing use of online banking technology, ranking ahead of cost reduction
and revenue enhancement. Banks see online banking as a way to keep existing
customers and attract new ones to the bank.

Cost efficiencies: Banks can deliver banking services on the online at
transaction costs far lower than traditional ways. The actual costs to execute a
transaction will vary depending on the delivery channel used. These costs are
expected to continue to decline.

Geographical Reach: Online Banking allows expanded customer contact
through increased geographical reach and lower cost of delivery channels. In
fact some banks are doing business exclusively via the online they do not have
traditional banking offices and only reach their customers online.

Branding: Relationship building is a strategic priority for most banks. Online
banking technology and products can provide a means for banks to develop
and maintain an ongoing relationship with their customers by offering easy
access to a broad array of products and services. By capitalizing on brand
identification and by providing a broad array of financial services, banks hope
to build customer loyalty, and enhance repeat businesses.

As use of the online continues to expand, more banks are using the web to offer
products and services or otherwise enhance communications with consumers.
The online offers the potential for safe, fast, and convenient new ways to shop
for financial services and conduct banking business, any day, any time.

Prospects of online banking in Bangladesh

Bangladesh Bank was implementing the different projects for modernizing
national payment and settlement system started from 2009 followed by the
development of inter-bank online network. It made mandatory for all head
offices of the scheduled banks to be connected with Bangladesh Bank. 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 smooth
the introduction of e banking in Bangladesh.
Internet services came to Bangladesh with connectivity in 1996. Digital
telephone exchanges established in 389 upazilas and 17 growth centres. Work
was underway to cover the rest of the upazilas under digital exchange system.
Meanwhile, Bangladesh joined the information super-highway by connecting
itself with international submarine cable system in 2006. A total of 159 Internet
Service Providers (ISPs) now connected with this system of which 64 are actively
providing services. Internet connection was slow with bandwidth range 32 - 56
kbps for dial up and 64 - 8 mbps for broadband. Under this scenario, as a part of
government decision of building digital Bangladesh, the existing capabilities of
ICT sector was likely to increase rapidly in bringing all upazilas under internet
services and this will contribute in widening the scope of online banking
throughout the country.

The overall computer density in the banking sector was 1.64. For foreign
commercial banks (FCBs) the computer density was 45.34, where as for NCBs
the ratio was only 0.41. The specialized bank scenario was almost same as the
NCBs, 0.43. On the other hand, private commercial banks had comparatively
higher ratio, 4.94. As a whole 81.81 percent bank did not have any local area
network (LAN), 30 percent had WAN (Wide Area Network) but for some banks
many branches were outside of WAN connectivity. At present, all foreign banks
of our country were using online banking system; they were invested a lot for
their automation banking services. For this reason, they were increasing market
share every year. They were the pioneer of implementing electronic banking
systems in Bangladesh, but now most of the private banks of our country used
electronic banking systems. In our country different banks were offering
electronic banking services in different ways, some were offering ATM
(Automatic Teller Machine) services, some were telonline banking and some
were electronic fund transfer, debit card, credit card etc.

Recently, 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 accelerated the prospects of
online banking in Bangladesh.




Online banking offerings in Bangladesh

In Bangladesh, there are 48 commercial banks and among them 30 banks are
providing online banking services. Online banking was first introduced in
Bangladesh by Citi bank (N. A). Others pioneer banks are Standard Chartered
Bank, HSBC Bank and DBBL Bank. At present, others banks are also providing this
service for the benefit of customer.

Pioneer banks those are offering Online banking services

Citi Bank (N. A)
Citi has established a strong presence in Bangladesh, It now has 4 branches, 4
service outlets and employs over 180 people. Citi's clients in Bangladesh
comprise both public and private sector institutions.
Citi has a well-developed Financial Institutions business supporting the cross-
border transactions of nationalized and private sector banks in the country.
Global Transaction Services (GTS) supports Bangladesh corporates, financial
customers and public sector clients with its award winning cash management,
trade services, agency & trust, and direct custody & clearing solutions. Citi is also
the leading bookrunner of capital market solutions for our clients in Bangladesh.
Citi's Corporate and Commercial Bank services local corporates and
multinationals across several industries, providing vital linkage and an integrated
perspective throughout the Bangladesh supply chain and business operation.
Customer Benefit
To gain more control over ones cash positions, one needs easy access to
accounts and information in real time. One needs an application that is easily
customized by individual users and streamlines day-to-day operations. One will
need the convenience of local banking and the global solutions of an industry
leader. The solution is Citi bank (N. A) Online Banking. The motto of Citi bank (N.
A) is Money isnt everything but it can be everywhere. The facilities available
are:

Online Direct Debit Transaction Process
Information Reporting
Real-time information reporting for more effective cash management
Delivered with the highest level of security
Easy-to-use application
World Link through Citi bank (N. A)
Comprehensive payment transaction solution
Flexible, streamlined functionality
Reliability, speed and information
Payments through Citi bank (N. A)
A comprehensive payments solution globally and locally
Simplified, secure transaction management
Timely, accurate information
E-mail and Wireless Banking Alerts by Citi bank (N. A)
Standard Chartered Bank
Established: 1905 (including ANZ Grindlays experience; Standard Chartered Bank
originally established its first branch in Chittagong in 1948)
Today, Standard Chartered Bank is the largest international bank in Bangladesh
with 26 Branches, 57 ATMs and 7 Financial Kiosks; employing over 1,300 people.
They are the only foreign bank in the country with presence in 6 cities Dhaka,
Chittagong, Khulna, Sylhet, Bogra and Narayanganj; including the country's only
offshore banking unit inside Dhaka Export Processing Zone (DEPZ) at Savar and
Chittagong Export Processing Zone (CEPZ).
Customer Benefit
SCB provides following benefits to its customer through online banking.
Auto BillsPay
People can authorize the bank to pay all these bills directly from ones
Credit Card every month through the Auto BillsPay.
Monthly Credit Card statement will confirm you that all ones bills are paid
on time through ones Standard Chartered Credit Card Account. So you
can track ones bills very easily since the statement provides you detailed
narration of ones bill(s).
eSavers Account
eSavers Account is the Savings Account with Remote Banking solutions bundled
with exclusive Customer Value Propositions. Here the accountholders will be
primarily using our world-class alternate channels for their transactions and other
regular banking needs. Any Bangladeshi national with an age of 18 years or
above can open this account.
Special Features
No Interest Forfeiture Rules - Interest will be accrued on monthly average
balance and applied at each quarter-end.
Familink Add-on Card - No other bank offers an Add-on Debit Card for
ones loved ones.
World-class Alternate Channels - 24-hour Contact Center, Online Banking,
e-Statements, ATMs, Bills Pay Centers & SMS Banking
Counter Transactions at branches are not allowed
Free@ 18 Offer - Get ones Debit Card for free with only 18 retail
transactions in a year
Additional Features
25-leaves cheque book (Account-payee only)
SMS Banking
24 hour Phone Banking
Online Banking
e-Statements
Utility Bill Payment through Auto BillsPay and other channels
HSBC
In Bangladesh, the HSBC Group's history dates back to 1996 when The Hong
Kong and Shanghai Banking Corporation (HSBC) Ltd opened its first branch.
Today, the HSBC Group offers a comprehensive range of financial services in
Bangladesh including commercial banking, consumer banking, payments and
cash management, trade services, treasury, and custody and clearing.
General Background
Opened first Bangladesh branch in December 1996
Network of 13 offices, 39 ATMs, 9 Customer Service Centers, an offshore
banking unit, and offices in 7 EPZs.
1051 employees as of December 2010
Customer Benefit
HSBC bank provides the following benefits to its customer who uses online
banking:
Access ones account 24/7 (subject to planned maintenance periods).
View ones balances and transactions, including ones credit card
statements where applicable.
Choose to Go Green and switch off ones paper statements.
Make transfers between eligible HSBC accounts.
Pay bills to organizations and make transfers to friends and family.
Create, view, amend and cancel standing orders and Direct Debits.
Apply online for credit cards, personal loans, savings accounts and many
more products.
Take advantage of online discounts on selected products.
Update ones email address, postal address, contact telephone numbers,
marital status and number of children.
Foreign Exchange - Perform foreign exchange enquiries and services.
E-Statements - Download ones E-Statements to track ones transactions.
Online Bill Payments - Make life easier. Pay ones utility and other bills
online.
Total Banking Portfolio, Net Worth & Account Summary - Check/update
ones personal information/account.
Time Deposits - Placement of new time deposit, check or update ones
personal information and account.
Dutch-Bangla Bank Limited (the Bank, DBBL) is a scheduled joint venture
commercial bank between local Bangladeshi parties spearheaded by M
Sahabuddin Ahmed (Founder & Chairman) and the Dutch company FMO. DBBL
was established under the Bank Companies Act 1991 and incorporated as a
public limited company under the Companies Act 1994 in Bangladesh with the
primary objective to carry on all kinds of banking business in Bangladesh. DBBL
commenced formal operation from June 3, 1996. The Bank is listed with the
Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited.
Customer benefits through DBBLs services:
ATM Network/DBBL Nexus Participating Banks and Fast track services
DBBL has approximately 1000 ATM's installed all over Bangladesh, making it the
largest network by a large margin. ATMs is catering the needs of customers at
their doorsteps. It also hinted that this may be the last ATM expansion due to the
increasing costs of subsidizing such a system.
Banks that have signed agreements to share DBBL's ATM network:
Citibank (locally known as "Citibank NA")
Standard Chartered Bank (SCB)
Commercial Bank of Ceylon
Bank Asia
National Credit and Commerce Bank Limited (NCC Bank)
Prime Bank
United Commercial Bank Limited (UCBL)
Southeast Bank Limited (SEBL)
The Citi bank (N. A) (locally known as "Citi bank (N. A)" to differentiate
between "Citibank NA")
First Security Bank
Trust Bank
Mercantile Bank
Q-Cash network Banks (1. Janata Bank 2. Eastern Bank 3. IFIC Bank 4. AB
Bank 5. Shahjalal Islami Bank 6. Basic Bank 7. Jamuna Bank 8. Mercantile
Bank 9. National Bank 10. National Credit and Commerce Bank 11. Pubali
Bank 12. Sonali Bank 13. Trust Bank 14. Uttara Bank 15. State Bank of India
16. The Citi bank (N. A) 17. Social Islami Bank)
Dhaka Bank
EXIM Bank
Mutual Trust Bank is the last bank to use DBBLs ATM network.
Through these services people can withdraw cash up to fifty thousand for urgent
need. ATM card is secure as it is pin code restricted.
Fast track is mostly similar to ATM services. It gives the deposit facilities as well as
withdrawal. In a fast track there are more than 4 or five ATM booths.
Online Payment
On 3 June 2010, Dutch Bangla Bank Ltd. announced to allow online payments
system. Using their Online Payment Gateway merchants will be able to charge
their customers' Visa, Masters, DBBL Nexus and Maestro cards. This is going to be
revolutionizing the [e-commerce] in Bangladesh.
Any Visa/MasterCard cardholder (local or overseas) can use their cards to pay
at a number of e-Merchants against their purchase of goods. They can also pay
DESCO electricity bills. DBBL is working with airlines, railways, utility companies,
educational institutions, and stock exchanges for facilitating purchase of tickets,
payment of bills/fees and IPO subscription through the Online Payment
Gateway. It is also working to make an interface with PayPal.

Other banks offering Online banking services

Eastern Bank Limited

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

Bank Asia

Bank Asia symbolizes modern banking with innovative services in Bangladesh. It
has centralized Database with online ATM, SMS and Online query service. The
significant 8 delivery channel of Bank Asia is the shared ATM Network. Bank Asia
has 21 ATMs as a member of ETN along with eleven other banks. Bank Asia is
maintaining its competitiveness by leveraging on its Online Banking Software
and modern IT infrastructure.
It is the pioneer amongst the local banks in introducing innovative products like
SMS banking, and under the ATM Network the Stellar Online Banking software
enables direct linking of a clients account, without the requirement for a
separate account.

BRAC Bank

BRAC Bank deployed a layer of security system for its Online Banking. These
measures extend from data encryption to firewalls. BRAC Bank uses the most
advanced commercially available Secure Socket Layer (SSL) encryption
technology to ensure that the information exchange between the customers
Computer and BRACBank.com over the online is secure and cannot be
accessed by any third party. SSL has been universally accepted on the World
Wide Web for authenticated and encrypted communication between
customers computers and servers.

Arab Bangladesh Bank Ltd.

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

Information Communication Technology (ICT) Policies

Information Communication Technology (ICT) encompasses the broad fields of
data or information processing, transmission and communications by means of
computer and telecommunication techniques and these modern tools are
being increasingly used for organizational or personal information processing in
all sectors of economy and society. A dependable information system is
essential for efficient management and operation of the public and private
sectors. But there is a shortage of locally generated information needed for
efficient performance of these sectors. In order to meet this objective, ICT use in
every sector shall have to be accelerated in terms of information generation,
utilization and applications.
This Policy aims at building an ICT-driven nation comprising of knowledge-based
society by the year 2010. In view of this, a country-wide ICT-infrastructure will be
developed to ensure access to information by every citizen to facilitate
empowerment of people and enhance democratic values and norms for
sustainable economic development by using the infrastructure for human
resources development, governance, e-commerce, banking, public utility
services and all sorts of on-line ICT-enabled services. The policy statement set by
the Ministry of Science, Information & Communication Technology, Government
of the Peoples Republic of Bangladesh are based on the following areas:

Human Resources Development through Education and Training
ICT Infrastructure
Research and Development in ICT
Development of ICT Industry
Development of E-Commerce
E-Government / E-Governance
Establishment of Legal Issues

The supporting IT infrastructure

Computer Technology

Though the first main frame computer came to Bangladesh in 1964, but the
usage of PC became popularize very late to the common people. Several large
banks and private entrepreneurs in industrial sectors are the path makers of
achieving benefits from computer and computerized applications. Bureau of
Statistics and a few nationalized banks are the leaders in using computer in
government sector by processing data and information, while industrial
concerns in private sectors are the leaders in applying computer for their
accounting, payroll and inventory related applications.

The age of Internet begin

The Internet came late in Bangladesh, with UUCP e-mail beginning in 1993 and
IP connectivity in 1996. By July 1997 there were an estimated 5,500 IP and UUCP
accounts (Press, L., 1999) in the country and by the end of 2000 it has been
forecasted that the account holder could reach more than 50,000 through
different Internet Service Providers (ISP), who are offering Internet services with
bandwidth ranging between 65 Kbps and 2 Mbps through VSAT, Broadband.
In June 1996, the government decided to allow private entrepreneurs to act as
ISPs using VSATs (Very Small Aperture Terminal). In 1999, there were about 22,000
account holders with 10 ISPs (8 in Dhaka and 2 in Chittagong) and the total
number of users ranges around 100,000, while in 2000, there are about 50 ISPs
providing Internet services to more than 250,000 Internet users. The growing
demand of the society and the congenial global atmosphere towards Internet
has pressurized the entrepreneurs to rethink their policies and strategies to
accommodate the newly emerged rapidly enlarging target group.
Initially there were only a few UUCP (Unix-to-Unix Copy Protocol) accounts in the
country and then they were replaced by IP (Internet Protocol) accounts. At a
later stage low bandwidth 64Kbps VSAT (Very Small Aperture Terminal) link
became the main Internet backbone of the country with 120 million people.
Demand did not inclined high compared to the huge population base,
because most of them lives in rural areas where minimum tele-communication
infrastructure is missing and at the same time purchasing power of the general
communities limiting Internet connectivity with prevailing socioeconomic
conditions.
Bangladesh Telegraph and Telephone Board (BTTB) has already established a
network for high bandwidth Internet connectivity through offering commercial
services. BTTB has established a fiber optics backbone throughout the country
and also has a plan to offer ISDN (Integrated Services Digital Network) service
using the facilities in Dhaka and Chittagong cities. They have opened X25 and
X28 services in eight cities of the country and established Digital Data Network
(DDN) at Dhaka and four other cities. Through DDN they are going to offer IPLC
(International Private Leased Line Circuits), National (Point to Point High Speed
data Circuits), Local (Point to Point High Speed Data Circuits) and E1 Access
from PSTN (Public Switched telephone Network) to ISPs. [Source: BTTB2]

Internet users are increasing

Today the people are getting more technology conscious. They are well aware
of the benefits of the technology. This made many people a user of the internet
facilities. The number of users increased fast over the years.

From the figure we can see that there is a sharp rise in the number of internet
users. The number of internet users in Bangladesh has jumped by more than
150% in a year to over one million3, partly due to lower tariffs. This will form a
strong background in favor of online banking in Bangladesh.

The constraints on Internet Growth in Bangladesh
Though we have seen some sharp rise in the growth of internet and internet
users, there are some impediments on the way to the growth of internet in
Bangladesh. Some of the reasons are listed below:

Underdeveloped IT industry
Lack of efficient use of IT network
No direct access to the information super highway
Poor telecommunication infrastructure
Low-level of computer literacy
Widespread poverty
Low telephone penetration
Lack of software in the Bengali language

Opportunities for a better Internet support

Bangladesh has a nationwide fiber-optic network established by Bangladesh
Railway. Hardly 8% of this fiber-optic capacity was ever used during the years of
its existence. This facility can provide excellent backbone for nationwide voice
and data communication.
As we have no direct access to the information super highway the only option
is to communicate through satellite. Satellite communication is costlier than fiber
optic.
To avoid satellite communication and its high cost, we can establish the
missing link to the information super highway if the nation-wide fiber-optic
network is allowed to link up with the high speed fiber-optic backbone in India.
Availability of telephone lines and reduction in service fee will attract many
professionals into internet arena.
Young generation should play a vital role in developing IT industry in
Bangladesh.

Customer satisfaction

From the statistical analysis it is observed that there is a relation between
customer satisfaction in online banking and reliability, responsiveness, assurance,
empathy, and tangibles as such null hypothesis is accepted and alternative
hypothesis is rejected. A number of private commercial banks are operating
their activities in Bangladesh. Many banks can perform their activities by online
banking system. Robinson (2000) comments are supported by the research as
supply of online banking services enables banks to establish and extend their
relationship with the customers. The study further indicates Easingwood &
Storeys (1993) comment that the relationship between banks and corporate
customers is the most important factor in the success of new financial services.
Online banking is a much talked issue for last few years in Bangladesh and
currently gaining patronization for the country by the Bangladesh Bank which is
a central bank. However, it is still in the growing stage. Many enthusiastic
merchants started e-commerce activities in Bangladesh but due to lack of
support from the banking industries. E-bank fund transfer in Bangladesh is
allowed only through clearing house which requires at least two working days to
be settled the transaction. Online banking payment will also facilitate the
customers to pay their utility bills through ATM, Online banking or SMS banking
systems from anywhere anytime even from office / residence at mid-night or
holidays. Tomiuk and Pinsoneaults (2001) online banking environment
observation is supported by the study. Gradual process for implementing online
banking, new policies, rules and regulations are being enacted by the
Bangladesh Bank. Wise and Alis (2009) observation regarding customer
relationship management through automated banking system should be
considered by the policy makers. By stepping into new and aggressive strategy
of online banking, it can make a difference in Bangladesh banking sector. By
constantly reviewing its online banking systems, policies, process, and prices of
its products and services, ensuring various facilities, use of modern technology
and establishing a bond with the customers, it could reach in leading position.
On the basis of the literature review we go for quantitative test. Empirical results
and analysis of the findings proves that the null hypothesis is accepted and the
alternative hypothesis is rejected which was stated earlier.

The main benefit from the bank customers point of view was significant saving
of time by the automation of banking services processing and introduction of an
easy maintenance tools for managing customers money. The main benefits of
online banking were as follows: Increased comfort and timesaving-transactions
made 24 hours a day, without requiring the physical interaction with the bank.

Quick and continuous access: to information Corporations had easier access to
information as, they checked on multiple accounts at the click of a button.

Better cash management: Online banking facilities speed up cash cycle and
increases efficiency of business processes as large variety of cash management
instruments is available on Internet sites of banks. Private customers looked for
slightly different kind of benefits from online banking.

Reduced costs: This was in terms of the cost of availing and using the various
banking products and services. Convenience: All the banking transactions
performed from the comfort of the home or office or from the place a customer
wants to.

Speed: The response of the medium was very fast; therefore customers actually
waited till the last minute before concluding a fund transfer.

Funds management: Customers downloaded their history of different accounts
and do a what-if analysis on their own PC before affecting any transaction on
the web.

From the aforesaid findings it is observed that impact of on line bank has a
mixed result though most of the customers support that it provides good
customer services. This supports our null hypothesis. But the problem lies that
customers thought that technologically improved but quality of banking
services are worsen off. In case of other opinion survey most of the customers
are providing yes results which also indicate that null hypothesis is correct
However, in the opinion pull survey there is a question regarding dealing officials
of the commercial banks whether they are well conversant about their desk
work? The reply indicates that 52% and 53% customers of Dhaka and
Chittagong thoughts that dealing officers of the banks are not well conversant
about their desk work.

Now we are showing diagrammatic representations.



Customer Demographics

Online banking allows banks to offer a wide array of options to their banking
customers. Some customers will rely on traditional 5 branches to conduct their
banking business. Other customers are early adopters of new technologies that
arrive in the marketplace. The challenge to banks is to understand their
customer base and find the right mix of delivery channels to deliver products
and services profitably to their various market segments.

LIMITATIONS AND CONSTRAINTS

The focus of the study is mainly based on Dhaka based some selected banks in
Bangladesh. Online banking was the important issue in world but Bangladesh is
developing country with the limited infrastructure facility and limited skill
manpower. Computer literacy was found very few and information technology
was in the infant position. There were some limitations faced during the study:
Small span on time. Shortage of book and published sources were in
Bangladesh. The study was based on limited variable. Difficulties faced to
collect the desire information. Disclosing the information was very restricted. IT
division was not cooperative all the time. In addition, Interviewing target
respondents adopted convenience sampling as alternative to random
sampling, at some phases where respondents were inaccessible or not
available. Bank officials were found too busy and also reluctant to talk without a
proper written permission from the competent authority.

Although online banking has bright prospects, it involved some financial risks as
well. The major risk of online banking included 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 online banking services, this will
cause reputation risk); credit risks; market risks; and liquidity risks.

Empirical Analysis

Research and Development in ICT
Research and development in ICT will focus on need based fundamental and
applied research contributing to the improvement of quality and efficiency of
the application to our ICT industry. Bangladesh Computer Council will
encourage ICT R&D activities carried out by the public and private sector
organizations. along with ICT industries, will assist in formulating plans to conduct
need-based R&D activities in the Universities, BITs and public & private sector
R&D institutions and encourage the younger generation in these activities. The
ICT industry may fund for R&D activities for new ICT products and services
through Industry-Academia collaboration. R&D efforts on Bangla text
processing, Bangla voice recognition, translation and synthesis will be intensified.
Technology Corporations such as Microsoft, IBM, Computer Associates, Oracle,
SAP etc. will be approached to set up their R & D Centers in Bangladesh.
Contents for Internet and Intranet will be developed in Bangla

E-Commerce
The Government and the private sector will promote business in electronic form
and create an environment in which it will be well secured. Government will
take initiative to introduce and promote Government-to-Government (G2G)
transaction under the purview of e-commerce. Gradually this initiative will also
be extended from G2G to Government to Business (G2B) transaction in the
same line. Authentication of the identities of both buyer and seller or the
involved parties in an electronic transaction is crucial to promote inter-bank
transaction, encryption e-commerce. Security of electronic transaction should
be ensured through appropriate measures. Establish immediately inter-banking
payment system in electronic form. Legal framework to provide the guiding
principles, rules and legislation for e-Commerce shall be put in place.

SWOT Analysis
To find out the viability of a particular product we must perform a SWOT Analysis
of the product. This will analyze the Strengths, Weaknesses, Opportunities, and
Threats of the particular product. For analyzing the performance of Online
banking in Bangladesh the following SWOT Analysis is considered

Strength

Online banking is new in our market. Only a few banks are now offering
internet services in solving banking problems. Most of the banks are offering only
accounting information online. Actual fund transfer and fund disbursement is not
possible in all the banks that are offering internet services. So this product will
enjoy the benefit of a first mover.
It is cheap both for the banks and the customers. The bank will be able to
lower, down the overhead costs and make more profit out of it. Online banking
will require less manual workers. Again the customers will be able to save time as
well as money for their transaction needs.

Online banking is convenient as the service is available all the time at just a
click away.

Weaknesses

Security breakdown: The system will have a problem with the identification of
the individual who is initiating the transaction. In Bangladesh, the identification
of an individual is not yet supported digitally. So there will be a problem in
moving to the Internet era for banking purposes just now. First we will have to
develop a digital database of the users of the online banking services.

The transaction can be cancelled only via internet. The internet infrastructure
of our country is not that much supportive to provide all time access to the web.
So there will be a problem in executing the service with its full functionality.

Opportunities

Non-branch banking is becoming popular in our country. Many banks are now
offering non-branch banking facilities. A person can withdraw or deposit money
in any branch of the bank he has account with. So moving to online banking will
allow the banks to offer non-branch banking facilities.

The internet services are becoming very common to us. So a service offered
through the internet will be widely accepted in the near future.

Threats

People have concern about security and privacy. They like to feel their money
with their hand. They actually dont believe in virtual money transfer.

In the field of IT new technology is coming everyday. The one which is very
popular today might get obsolete tomorrow. So to have a competitive edge
over the competitors the banks must always update their services.

The movement towards online banking might marginalized the customers who
do not have internet access or who are not technologically sound. Despite the
presence of online Internet service in Bangladesh, its scope is largely
underutilized. The reasons include high service charges, lack of awareness, poor
telecommunication systems, government policy, low buying power of potential
clients, and lack of institutional support.

Cost Benefit Analysis

The main benefit of online banking is the amount of time (thus money) it saves.
Although Online banking is restricted to managing accounts and making on-line
transactions, it cuts out much of the need to personally visit the bank. Using
Online banking will also increase the efficiency of paying money (bills, debts,
wages, etc) as it can reduce the need for writing and sending cheques (which
can take up to 5 days to clear). Wages and Salary payments can be created
via online banking to pay such money, which is also an efficient way of paying
staff wages. On-line banks are able to offer their customers higher interest rates
than high street banks due to their reduced overheads. If the popularity of
Online banking takes off as predicted the banks may also be capable of
offering their Online banking customers higher interest rates (due to reduced
overheads or as an incentive). Though Online banking will require a higher initial
investment, the operating expenses will be much lower. Again customers will be
satisfied through fast, accurate, easy-to-use, comprehensive delivery of the
services. So online banking will be much more beneficial to banks as well as
customers.

Discussions and Conclusions:

Due to advent of e-business especially on line banking system, the distribution
channel is also changing. But quality of banking services should be international
standard.

To attain more effective and efficient business procedure, Bangladesh has to
produce commodities of global standards. Ali, Mohsin, and Yasmeen( 2004)
observation may be followed to attain e-business efforts through information
dissemination, knowledge transfer, and technical assistances. However,
Bangladeshs global Network Readiness Index should be improved from present
situation.

From the respondents opinion in the area of Dhaka City and Chittagong city of
the on-line banking user customers we observed that null hypothesis is accepted
while alternative hypothesis is rejected. It indicates that on line banking can
provide better customer relationship management. As per findings behavior
pattern of the bank personnel should be improved. Not only technological
improvement is desirable but also banking service as a whole should be better
off. Chandrasekhar and Sonars(2008) comment should be considered as not
only technological progress but efficiency of the banking services are required
as on line banking customers are not still fully satisfied with the services.
Study on customers feedback is partially supported by the findings of Nyangosi ,
Arora , Singh (2009) as they argued that banking through electronic channels
has gained increasing popularity in recent years. However, policy makers should
consider Shah and Clarke (2009) observation. Because from the customers
feedback, the study observes that paying attention on human, operational,
managerial, and strategic organizational concern in online banking is required.

Moreover, bank personnel should be well conversant about their respective
desk work. This is also applicable to other organizations which are implementing
e-business in the country. Otherwise customer relationship management cannot
be improved. Buffams (2000) comment is more practical for the companies of
Bangladesh as e-business will lead to attain competitive advantage as will they
can outperform their competitors.
The study also done to observe different types of services and use of softwares
by the banks. From the field level study we observe that Core Banking, Cluster
Banking,

Phone Banking, SMS Banking, Online banking, Various Cards, ATM ,SWIFT,PC
Banking, POS Terminal, Banking KIOSK, Offline Branch Computerization are being
provided. From the point of view of on line banking, still foreign banks are
providing more on line banking services than private commercial banks. Then
nationalized commercial banks and last being on line banking services are
being provided by specialized banks.

Ahshans(2009) observation is important for Bangladesh as it will help to
enhance economic development. Creation of appropriate
personnel/professional can improve the economic condition of the country. As
such stress should be given to develop human ware.
E-business can play important role to reduce poverty only when it can be
effectively utilized for spreading the business both in rural and urban areas,
creation of job opportunities, removing middlemen in the business process and
one to one direct selling process and increasing both income and saving.
Internet accessibility should be used for poverty reduction. Following should
keep more emphasis on e-business: IT firm; Export/Import traders; Export
oriented/Potential export business; Facility provided ISP/Internet; Infrastructure
development- Govt.;
Ministry of Commerce, Ministry of Law, Ministry of Science & ICT, Export
promotion bureau; Telecommunication / Infrastructure ;Awareness on IT benefits
among the mass. In this regard Governor of Bangladesh Bank Rahman (2010)
rightly points out that a holistic approach needs to be taken by all the
stakeholders to reach the ICT facilities to the doorstop of the common people.
Actually e-technology can be utilized with other computer peripherals to
enhance communication, skill ness and understanding and provide a sound
basis for implementing e-business. It can be helpful to accelerate the learning
process, including the acceleration of the development and application of
knowledge and technology. This includes development of the system and
infrastructural development and support where followings are required: (a) E-
procedure, (b) Browser based system development, (c) Web enable of legacy
and/or client server systems, (d) Enterprise application integration, (e)
Implementation or use of application server technology. Ahmed and Islams
(2008) observation should be cautiously taken so that adopting on line banking
services for which banks in Bangladesh can develop strategies for expediting
not only banking business but also providing customers satisfaction.

Business sector should be encouraged that make their own investment in the
application of ICT in production, trade and services. Procurement and utilization
of funds from national sources, both public and private should be pursued.
International development and donor agencies should be approached to
provide funds to set up necessary infrastructure and development of human
resources, confirming to the objectives of ICT policy. Shah and Clarke (2009)
observation about the online banking can be transformed for successful e-
business policy formulation as it depends on human, operational, managerial,
and strategic organizational issues. Islam and Yang(2009) rightly observed that
service satisfaction and information trust can play positive role to attain e-CRM
and balance score card model which is not only valid for the financial
institutions but in a large extent i.e. business process of the country.

Economy of Bangladesh is still underdeveloped and one of the main reasons is
banking system is not properly developed. Technology is one part but personnel
should be well conversant with their respective desk work and behavior pattern
should be improved.

Government as well as different international organizations have also identified
that underdeveloped banking causes some costly obstacles on the way of even
economic progress of the country. Investors are frequently scared in invest
because of its sluggish banking system. Hence the task of making the banking
system of Bangladesh at per international standard deserves the highest priority.
Business processes should be reengineered.

Banks will have to face stiff competition in the world market with increasing of
impact of globalization and the banks will be forced to offer twenty four hours
banking services online. Regulatory issues relating to security measures of
electronic banking can be improved through the following ways:
a) Analyzing the potential risks in the electronic payments systems;
b) Existence of tradeoff between the efficiency of the financial system and the
amount of risk incurred;
c) Competitive pressures that may encourage the banks to engage in
competitive deregulation; d) Effective provision and arrangement for
cryptography and its applications;
e) More customers are willing to accept e-business as psychological patterns of
the customers have been changing.

Global financial system has getting stronger day by day and it is strengthening
by the e-business. Around the globe, consumer market has greater potentialities
and producers must be active otherwise they may lose their share in the
marketing strategies. Customer retention is feasible through arranging e-business
otherwise if switching cost is low and other factors in between two companies
are similar then customer will switch from one company to another where
technological advancement is relatively higher. Moreover, rate of call charge of
cell phone should be lowered. Hidden cost in cell phone should be removed.

However, on line banking as well as electronic fund transfer and electronic data
interchange is not free from risk. Not only security risk, but cost of transactions
may also be raised .In this regard Rahmans (2001-2002) observation regarding
risk should be cautiously handled.

The country can be benefited through successful utilization of e-business .This will
help to enhance productivity and customers will be satisfied. Producers will also
be benefited and monetary gain can be attained. E-business especially with the
help of on line banking can manage economy of Bangladesh in a better way
as customers satisfaction can be increased.

Recommendations:

To implement online banking successfully in Bangladesh following
recommendations are given below:

Digital Bangladesh may be activated by 2021 to develop the economy of
Bangladesh. Successful team building with a coherent manner for developing
human ware, hardware, software and web ware are required to increase e-
business process in a systematic way. Moreover, greater emphasis should be
given on security system and to prevent fraud so that any sort of financial
transactions including on line banking payment or any other electronic fund
transfer can be properly handled.

Career path of hardware and software engineers should be properly
designed. Otherwise professionals will be de-motivated and they wont work
with job satisfaction.

In Bangladesh, on line banking systems are yet at a take off stage. The
Clearing House operation in Bangladesh should be fully automated system.
Banks and business organizations especially corporate houses should have
adequate research, skilled manpower and technology driven strategies in this
regard.

Initiatives to develop integrated online banking software, common gateway is
required so that inter bank transactions can be feasible. Bank can charge
normal profit to enlarge the market size on the on line banking products. Banks
should have their own strategic plans to implement on line banking system.
Creating awareness and consciousness among the clients of the banks are also
required.

The country needs to develop online banking with the help of ICT facilities. ICT
application and development of software are very much dependent on the
quality of the workforce, and supportive infrastructure and environment. Upzilla
level may be considered as the base unit which may be connected with district
and then connectivity with the capital of the country can be done. However,
more stress should be given on wire free connectivity for which priority should be
given on WIMAX technology.

Public and private participation (PPP) for online banking should be
encouraged for economic development. Spread of on line banking is a very
good initiative. But it is not only sufficient. Business sector as a whole should be
focused on using online banking. More stress should be given to the wireless
transactions and working environment due to rapid technological
advancement.

Online banking can ensure quality assurance of the business sector. As such
business policy formulation and strategies are required and this should be
properly implemented. Adequate training and technological support to be
developed so that trained manpower and technology driven organizations can
be created with the help of partnership between Govt. and non Govt.
organizations.

More high-speed fiber optical data communication infrastructures should be
well established for speedy data communication for domestic and global high
speed communication system. This will help to attain better on line banking
system. Competitive situation should be arranged so that online banking
management can be improved through efficiency and effectiveness of
customer services.

BTRC as a regulatory body should work with long term vision, mission and
fulfillment of goal oriented strategies. They should work as a facilitator rather not
creating hindrance. VOIP should be legalized after examining and finalizing
proper rules and regulations in the country.