Electronic Banking

Electronic banking as a segment of electronic business, which, in turn, encompasses all types
of business performed through electronic networks. Electronic channels are used for both
business-to-business and business-to-customer transactions, such as ordering goods,
delivering software or paying for such transactions. E-banking is considered to be a segment
of e-business to the extent that banks are involved in the conduct of business transactions via
electronic media; other non-banking financial products and services (e.g. insurance), not to
mention products and services from other sectors of business, may be sold electronically as
well In other words, e-banking is not a banking product; rather, it describes the way
transactions are conducted.

Growth in E-Banking
Numerous factors including competitive cost, customer service and demographic
considerations are motivating banks to evaluate their technology and access their electronic
commerce and internet banking strategies. Many researches expect rapid growth in the
customer using online banking products and services. Evaluating a bank’s strategic
objectives, how well the bank is meeting its internet banking product plan and whether the
business is expected to be profitable studies show that competitive pressure is the chief
driving force behind increasing use of internet banking technology, ranking ahead of cost
reduction and revenue enhancement, in second and third place respectively. Banks see
internet banking as a way to keep existing customers and attract new ones to the banks.
National banks can deliver banking services on the internet at transaction cost far lower than
traditional brick-and-mortar branches. The actual cost to execute a transaction will vary
depending on delivery channel used. National banks have significant reasons to develop the
technologies what will help them to deliver banking products and services by the most cost
effective channels.

E- Banking Services and Products

E banking products and services can includes wholesale products for corporate customers as
well as retail and fiduciary products for individual customers. Ultimately the products and
services obtained through internet banking may mirror products and services offered through
other bank delivery channels. A brief description of retail and wholesale products and
services are given below:

   Automated Teller Machine (ATM)

Automated teller machine (ATM) is a computerized telecommunication device that provides
a financial institute s customer with a method of financial transaction in a public space
without need for a human clerk bank teller.

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 Debit Card
Debit card is a plastic card which provides an alternative payment method to cash while
making purchases. the amount of transaction is typically displayed on a card reader, after
which customer swipes the card then enter their pin number (a attendant must swipe gift
cards at gas stations).there is usually a short delay while the EFTPOS (electronic fund
transfer at point of sale) terminal contract the computer network (over a phone line or mobile
connection) to verify or authorized the transaction)

Credit Card
Accredit card is a system of payment named after the small plastic card issued to user of the
system. Credit card is different from debit card in that it does not remove money from the
user account‘s after every transaction. In the case of credit card, the issuer lent money to
consumer. It is also different from charge card (though this name is sometime used by the
public to describe credit card) which require the balance to be paid in full each month. In
contrast credit card allow the customer to revolve their balance at the cost of having interest
charged

Point Of Sale
Pos is a abbreviation of point of sale ( or point of sale or point of service) this can mean a
retail shop, a check out counter of in a shop, or a variable location where a transaction occur
in this type of environment. Additionally point of sale refers to the electronic cash register
system being used in an establishment. Point of sale system are used in a restaurant, hotel,
stadium, casino as well as environment in short, if something can be sold, it can be sold
where point of sale system are in used.

  Cheque Truncation
Check truncation is such a service in which a financial institution does not return the rejected
checks with the monthly statement. The bank store the rejected check for a certain
period(usually 90 days) during this time period customer can adjust his account if any
imbalances found between his own record or and the bank statement  provided by the bank.
After the expiration of this stipulated period, rejected check are spoiled and bank maintain a
micro film of copy for a period.

Home Banking
At first, bank introduced telephone bill payment system so that customer could be able to do
their banking activity from their home. The next version of home banking is a video home
banking. The internet is expected is to be a major factor in home banking.

The Retail Automated Clearing House Service

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 The automated clearing house is a electronic network for financial transaction.ACH possesses
large volume of credit and debit transactions which are originated in batches.ACH credit
transfer include direct deposit payroll payments and payment to contractors and
vendors.ACH debit transfer include consumer payment on insurance premium, mortgage loan
and other kinds of bills. Businesses are also increasingly using ACH to collect from customer
online, rather than customer debit and credit card.

Wire Transfer
Wire transfer is the process which ensures fast and appropriate timing of fund transfer from
sender to the recipient. These kinds of transfer of money could be either within the country or
abroad. Fund are transferred under the following network

  Corporate Automated Clearing House

Corporate automated clearing house is a network for financial transactions which are
originated in batches. Other retail and fiduciary product and service includes balance inquiry,
fund transfer, downloading transaction information, bill presentment and payment, loan
application, minvestment activity and other value added services.

Security Measure in E-Banking

Security of a system is the extent of protection against some unwanted occurrence such as
invasion of privacy, theft and the corruption of information or physical damages. As this
system is developed through the internet there is a big chance hacking through our system.
Current browsers counter security threat with a network communication protocol called
secure socket layer (SSL). SSL is a set of rule that tells computer the steps to take to improve
the security level of communication. These rules are designed for the following

Encryption
Guards against eavesdropping. Encryption is the screaming of information for transmit ion
back and forth between two points. When we send out letter to our friend, we communicate in
a language that both of us understand. Since our language is understood by thousand of other
people also, if some one gets hold of our letter, he will not get any problem in understanding
its contents.

Consumers Benefits
General consumers have been significantly affected in a positive manner by E-banking. Many
of the ordinary tasks have now been fully automated resulting in greater ease and comfort.

1. Customer’s account is extremely accessible with an online account.

2. It provides ways for international banking.

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3. Customer can withdraw at any time through ATM’s that are now widely available
throughout the country.
4. It provides banking throughout the year 24/7 days from any place have internet access.
5. It provides well-organized cash management for internet optimization.
6. It provides convenience in terms of capital, labor, time all the resources needed to make a
transaction.
7. E-banking has also greatly helped in payment of utility bill. Now there is no need to stand
in long queues outside banks for this purpose.
8. Through Internet banking customer can operate his account while sitting in his office or
home. There is no need to go to the bank in person for such matter.
9. It provides some security and privacy to customers, by using state-of-the-art encryption
and security technologies.
10. The growth of credit card usage also owes greatly to E-banking. Now a customer can
shop worldwide without any need of carrying paper money with him.

Banking Industry Benefits

Banking industry has also received numerous benefits due to growth of Electronic banking
infrastructure. They are highlighted below:
 The growth of E-banking has greatly helped the banks in controlling their overheads and
operating cost.
 Electronic banking has greatly helped the banking industry to reduce paper work, thus
helping them to move the paper less environment.
 Electronic banking has also helped bank in proper documentation of their records and
transactions.
 Many repetitive and tedious tasks have now been fully automated resulting in greater
efficiency, better time usage and enhanced control.
 The rise of E-banking has made banks more competitive. It has also led to expansion of
the banking industry, opening of new avenues for banking operations.
 The reach and delivery capabilities of computer networks, such as the internet, are far
better than any branch network.
 The cost of operation per unit of services is lower for banks.
 Offers convenience to customers since they are not required to go to the bank’s facilities.
 There is a very low incidence of errors.
 The customer can obtain funds at any time from ATMs.
 Credit cards and debit cards allow customers to get discounts at points of sale.
 The customer can easily transfer the funds from one place to another place electronically.

Limitations Of E-Banking

 Huge Number of branches all over the Bangladesh even outside the country and for the
purpose of automation huge investment is necessary.

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 Most of the branches are in the rural areas where there are no modern digital
communication facilities.

 Most of the users or clients of the banks are poor and uneducated village people having
no knowledge about electronic banking and cannot afford it at the current cost level.

 Most of the officials of these banks in the classical stage especially the state owned ones
are aggie and cannot understand and are reluctant to accept modern electronic banking.
To turn around these banks at first the outdated mentality of these officials of the classical
banks.

 Illiteracy is a great problem in consideration of E-Banking activities execution.

Conclusion
Electronic Banking has greater impact in the economy and in the banking sector as well.
Making financial services available to the poorest people is recognized as an important part
of poverty reduction strategies. Technological innovation offers significant hope, although it
will result in fundamental changes to banking delivery mechanisms as well as to the very role
of banking service providers and their relationships with customers. In case of productivity,
efficiency, economic growth, giving optimum service to the customers, electronic banking
has huge contribution as a whole.

References
1. https://www.assignmentpoint.com/business/report-on-electronic-banking-in-
bangladesh.html
2. http://business-assignment-plus.blogspot.com/2013/11/electronic-banking-system-in-
bangladesh.html#comment-form
3. https://www.assignmentpoint.com/business/analysis-of-poters-five-forces.html

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Meaning and Origin of Bank: The word ‘Bank’ is widely and extensively used and
circulated. The ‘Bank’ in English carries the same meaning in Bengali. The origin of English
word ‘Bank’ came into being (when, where and how) which could not be specifically
identified. The history regarding the origin of ‘Bank’, even after the twelfth century, is not
also clear which has been based on guesses. According to some writer the word ‘Bank’ was
derived from ‘Banco’, ‘Bancus’, ‘Banque’ or ‘Banc’ all of which mean a bench upon which
the mediaeval European Money-lenders and Money –Changers used to display their coins.
Anyhow this word has been in use from the middle ages in connection of a bank.  In the
words of German writer W. Frankace, a long stool or bench was said to be replaced by Bank,
Bangke etc. in the Scandinavian and Mid-European countries. Again, Dutch and French
words ‘Banque’, ‘Bangko’ were used to mean stool or bench and in course of time the word
‘Bank’ came into effect.
In the Mediaeval age Italian states were sound and solvent economically and commercially.
At that time a group of people used to conduct business of transaction of money sitting on a
stool or bench which was replaced by ‘Banco,’ ‘Banko’ ‘Banca’, ‘Bangk’, ‘Bancus’, ‘Banc’
etc.It is assumed that the word ‘Bank’ was originated from these words.

In the later age, an English writer Maclead challenged the above concepts.

Commercial Bank: Historically, commercial bank came into being for its commercial
purpose. The inception of  modern banking is the outcome of commercial bank. In the words
of Professor Roger, “ the bank which deals with money and money’s worth with a view to
earning  profit is known as “Commercial bank.” Professor Hart says, “ A banker is one who,
in the ordinary course of business, honours cheques drawn upon him by persons for and for
whom he receives money on current account.”

The objectives of a commercial bank:

1. To establish as an institution for maximizing profits and to conduct overall economic
activities.

2. To collect savings or idle money from the public at a lower rate of interests and lend these
public money at a higher rate of interests.

3. To create propensity of savings amongst the people.

4. To motivate people for investing money with a view to bringing solvency in them .

5. To create money against money as an alternative for enhancing supply of money.

6. To build up capital through savings.

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7. To expedite investments.

8. To extend services to the customers.

9. To maintain economic stability by means of controlling money market.

10. To extend co-operation and advices to the Govt. on economic issues.

11. To assist the Govt. for trade& business and socio-economic development

Functions of Commercial Banks in Bangladesh

Receiving Deposits: This is the main function of commercial banks to collect savings of
individuals and firms. They offer different types of deposits for the facility of the customers.
Those are: Current Account or Demand Deposits, Saving Account, Fixed Deposit.
Current Account or Demand Deposits: Any amount can be withdrawn from this account at
any time without any notice. No interest is allowed on this type of account.
Saving Account: This type of deposit account which is usually held by the middle-class
group. The saving account carries lower rate of interest.
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Fixed Deposit: Amount cannot be withdrawn before the fixed future date in this type of
deposit. High interest is allowed in fixed deposit which is different according to period.
Advancing Loans: This is the important function of the commercial bank. Credit is given to
the people in different ways.
Loan Account: There are three types of loans given to borrowers.
1. Short Term Loans: These loans are advanced for the period of six months to one year.
High Interest rate Is charged on this type of accounts.
2. Medium Term Loans: Loans from one to five years are called medium term loans.
3. Long Term Loans: Loans which are advanced for the period, more than ten years are
long term loans.
Bank Overdraft: Banks allows their trustful customers to draw more than the deposit they
have in the Bank. Bank charges interest on overdraft.
Cash Credit: Bank also gives credit against immovable property and interest is charged by
the bank.
Discount of Bills: This is income source of bank to discount bills of exchange. They charge
nominal Interest and discount only reputed and clear bills of exchange.
Economic Development and Welfare activities: Commercial Bank contributes much for the
welfare and economic development of the country.
Act as a trustee: Commercial Bank acts as a trustee on behalf of the customer.
Collect utility service bills: As a social commitment, Commercial Bank collects utility
service bills e.g. water, electricity, gas, telephone etc. from the public.

References:
1. https://bankerguide.wordpress.com/2012/08/24/hello-world/
2. https://www.slideshare.net/vikassingh_s/functions-of-commercial-banks
3. https://www.google.com/search?
q=function+of+commercial+bank+in+bangladesh&oq=function+of+comm&aqs=chrome.
5.69i57j0l7.9685j0j7&sourceid=chrome&ie=UTF-8

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