E-Banking Practice in Commercial Banks in Bangladesh Essay

Customer’s reliability of e-banking services | 20 | Executive summary: Banking sector is one of the most important sectors for the economic development of a country. Modern commercials banks since their early days had been doing two main functions. These are Acceptance of deposits from the public and lending money to the people. Generally banks deal with others (people) deposits. So it is very important to make sure that all deposits are invested as well as maintained in an

Islamic ways. In this report, there is a survey on practices of E banking section in Commercial Banks of our country Bangladesh. This report covers four chapters. In first chapter naming Introduction shows the statement of the report and methodologies of survey design. In second Chapter, there is an overall background of the E banking matters and its present scenario in Bangladesh. Also covers different types of E banking that practices in different banks. In Third Chapter, there is an Analysis of data, I. E presentation of data designs.

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In this section, we will divide the questionnaires in 6 groups. Each group contains different categories of questions regarding customer accessibility, the practice of e banking, its services, and costs, infrastructure facilities, supporting technologies and customer reliability. In forth chapter, there is some constraints of e banking, analysis of findings and recommendation. After concluding section this report shows the survey questionnaire layout. This report will help to understanding the benefits of E- Banking in our business environment.

And after having a look of this report we can say that, E-banking business can add value through knowledge management as it alps to attain new services to the customers. Successful e-business depends on sharing of strategic knowledge for which dissemination of the information and free flow of knowledge around the globe is required. On line banking can provide twenty four hours banking facilities. Through electronic data interchange customers are able to draw money from one branch to another. Letter of credits can be sent through SWIFT or electronic fund transfer from one country to another can be feasible.

Actually on line banking provides faster, reliable services. Encryption and decryption can be used to send money from one place to another. As such on line bank management handles customers in a far better way. Chapter One (Introduction) Chapter Highlight * Statement of the problem Objective of the report Origin of the report Methodology Limitation of the study Introduction (Statement AT teen problem): In which form of banking funds are transferred electronically between financial organization instead of cash, checks, or other negotiable instruments being physically exchanged.

The transfer of funds and ownership of funds between financial institutions are preserved on computer systems which are connected by telephone line. Account holder can access their account or records using a password or personal identification number, called PIN. He can use a physical signature on a check or other documents. Automated Teller Machine Networks and Point-Of- Sale system are one kind of process in which system Electronic banking systems can be low- money retail payment systems mentioned by financial institutions.

New York Clearing House Association operates the Federal Reserve Fed Wire or the Clearing House Interbrain Payments System and it may call large-dollar interbrain payment system. Some banks offer home banking, in this way a customer can regulate his orientations and account records being at home with a personal computer and a telephone line connection by accessing web site. Electronic banking has reduced the physical documented sharing and exchanging at transaction one person to another and one account to another account.

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 e-business. Internet has opened a new horizon of e-soulless, creating Immense opportunities Tort marketing products as well as managing organizations banking internationally. Gradually wireless Internet system has been creating a new paradigm and electronic fund transfer can have a suitable formation.

Information technology is becoming an important factor in the future development of financial services industry, especially the banking industry this context, banking sector are obliged to continuously innovate and update their marketing strategies in order to closely meet the demands and the requirements of the individual customers. It also provides safe and confidential services which best suit customers’ needs. Governments as well as different international organizations eave also identified that underdeveloped banking technology creates hindrance on economic progress of the country.

On line banking system is a way of conducting, managing, and executing banking transactions utilizing information and communication technology (ACT) and electronic communication networks such as the Internet, intranet and extranet. Environment of electronic banking requires authentication procedures for electronic payment system, network environment, computer hardware and software, electronic hardware, legal bindings, etc. Objectives of the Study: The objectives of the study are to, 1. Present the current scenario of E-banking in Bangladesh. 2.

Identify the problems as well as prospects of E- banking in Bangladesh. 3. Suggest measures for growth of E-banking in Bangladesh. Origin of the Report: For any business school student only curriculum activities are not enough for handling the real business situation. The report entitled the practice of E-banking in commercial banks of Bangladesh was assigned by our course instructor, Ayes Johan, Senior Lecturer, Department of Business administration, Northern University Bangladesh, Banana Campus, as a requirement for the completion of the MBA program.

It is a group assignment; we are 5 members in our group. The primary goal of report is to have the opportunity to relate the theoretical conceptions in the real business environment. The report covers 4 banks respondent to complete survey report. During this period we have learned how the host organization works with the help of the E-banking services and what is the lacking behind this. On the basis of survey experience we have prepared this report and we have tried our best to relate the theoretical knowledge with the practical work situations to find out the actual scenario of the E-banking of Bangladesh.

Methodology (Sources of data): The study is based on secondary sources and also primary sources. As such the study has reviewed different published articles, books, newspaper, and websites. However, the study will also collect related information regarding present status of the on line banking through field visit in four banks, I. E. Bangladesh Bank to collect related information. The study collects data on following points: customer’s accessibility, Services provided by the banks, practice of software for e banking use by the banks, the infrastructure facility etc.

Moreover, the study also did a survey tongue preparing a quadrennials. For collecting data Trot teen respondents’, TN study used snowballing sampling technique. The survey was conducted among 20 respondents. They are of following banks: CUBA, Dutch Bangle Bank Ltd, UNCLE, BIBLE Observations through field study was obtained are being reported at the present status of the E-banking system. The study did not use any sort of correlation or regression analysis as this study is mainly based on qualitative nature.

Limitation of the Study: Bangladesh is lacking behind to use internet or E-Banking in banking transaction comparing most of the SCAR countries. So collecting data is very much difficult in Bangladesh. Banks 1 are not interested to disclose their business secrets. In addition to this, Journals, periodicals and published data are not available on this issue. We put all efforts to collect necessary data though we had time and budgetary constraints. Moreover, interviewing target respondents adopted convenience sampling as alternative to random sampling, at some phase where respondents were inaccessible or not available.

Banks officials were found too busy and also reluctant to talk without a proper written permission from the competent authority. Moreover, while collecting data they did not disclose much information due to secrecy if the organization. Chapter Two (Background of E-Banking) * E-Banking * Why E-Banking * History of E-Banking * Different types of E-Banking * Problems of E-banking * Crimes on E-banking * E-Banking in Bangladesh E-Banking Electronic banking (e-banking) is the newest delivery channel for banking services.

The definition of e-banking varies among the researches partially because electronic banking refers to several types of services through which bank customers can request for information and carry out most retail banking services via computer, television or mobile phone (Daniel, 1999; Molls, 1998; Estate, 1999). Burr (1996) describes E-banking is an electronic connection between bank and customer in order to prepare, manage and control financial 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. E-banking includes the systems that enable financial institution customers, individuals or businesses, to access accounts, ransack business, or obtain information on financial products and services through a puddle or private network, Including teen Internet. Customers access E-Dankly services by using an intelligent electronic device, such as a personal computer (PC), personal digital assistant (PDA), automated teller machine (ATM), kiosk, or Touch Tone telephone (Federal Financial Institutions Examination Council, n. D). E-banking or internet banking or online banking are analogous and defined as the conduct of banking services by using electronic delivery channels such as ATM, telecasting and PC banking.

Under this banking process, the branches of a bank are connected electronically in such a way so that a client or a customer of a particular bank can draw the money or make deposits anytime anywhere of the country or the world. Large number of banks world-wide offer e-banking/web banking/internet banking, whereby their customers manipulate their personal finances and execute transactions via the internet. Banks and others financial institutions advertise frequently on the significance and convenience of the e-banking facilities. Banks are encouraging their consumers to be benefited from e-banking services.

E-banking will non mature into an offensive business strategy rather than a passive. History The history for the modern home electronic banking services were the distance banking services over electronic media from the early ‘ass. Online services were first come to us in New York in 1981 when four major banks among all other banks were started offer home banking services. The Auk’s first online banking services were first formed by Nottingham Building Society in 1983. The system was based on Auk’s Presets system and maintained by use of a computer, such as the BBC Micro, or Keyboard connected to the telephone system and television set.

Electronic banking is known to us since 1990. In Bangladesh, some multinationals incepted the ATM booth in Dacha since 1992-93. In Bangladesh Dutch Bangle Bank is the first bank for Electronic banking system who introduced first online banking system as Bangladesh bank. The automation was completed in 2003, but all the other facilities are being changing day by day and making it up grade continuously. All of the services are free-of-charge and can be affordable for everyone. Why E- Banking? Banks have developed electronic banking system for four main reasons: 1. TO protect and increase market share 2.

To reduce operating cost by substituting physical capital and technology for labor. 3. To generate new revenue 4. To secure banking system. Generations of E banking: First generation I Ledger Cash management Head office MIS | 1. Cash dispensers I Second generation I Transaction Processing[affine]Aches Generation of information for record safekeeping transfer | 1. Telephone bill payment POS systems 2. Check verification. Tams Authorization I Third generation I Online transaction processing Centralized processing at country level Internet Vinaigrette’s transaction processing | 1. Automatic Fund Transfers.

On-line Banking 3. Home Banking electronic Direct Deposit 4. Check Transactions. Lock Box Check I I Nils Tactical TTY given Day Deterrent Dank In Bangles: Bank accounts: savings, current, FED, PODS, Term deposit scheme for the satisfaction of Bangladesh all customer all kinds of accounts are maintained in electronic way. People can deposit their money from any branch electronically and also can withdraw from anywhere of this country and any branch of in this way. These are the common bank account; in which bank pay more attention for providing more facilities and all kind of services.

This bank also has maximum number of ATM booth in many where of Bangladesh. Different Types of E-banking: Tell-banking: Tell-banking service is provided by phone. To access an account it is required to dial a particular telephone number and there are several options of services. PC banking: The term ‘PC banking is used for banking business transacted from a customer’s PC. Using the PC banking or home banking now customers can use their personal computers at home or at their office to access their accounts for transactions. For subscribing to and dialing into the banks’ Intranet proprietary software system is use for password.

Internet Banking: Internet banking would free both bankers and customers of the need for proprietary software to carry on with their online banking transactions. Customer behavior is changing rapidly. Mobile Banking: Actually mobile banking is a variation of Internet banking. Mobile banking is a good example of how the lines between the various forms of e-banking are becoming gradually blurred. Problems of E-Banking: The risk of electronic banking system is one of the familiar issues to all of us. Today it’s becoming one of the burning questions to the electronic banking system provider nanas. In many situations it faces different problems.

Such kinds of problems are following here: 1. Illegal Transparency 2. Not enough reserve for withdrawal 3. Network system can be claps 4. Money can be hacked. The risk assessment process should: Identify all transactions and levels of access associated with Internet-based customer products and services; Identify and assess the risk mitigation techniques, including authentication methodologies, employed for each transaction type and level of access; and Include the ability to gauge the effectiveness of risk dictation techniques for current and changing risk factors for each transaction type and level of access.

Risk of E-Banking: The Chief Privacy Officer (COP) is a senior level executive within a business or organization who is responsible for managing the risks and business impacts of privacy laws and policies. He regulates all the department of e-banking. So all the risk responsibility goes to him. Strategic risk: There can be a lack of understanding about its potential and implications. Bank should handle such kind of risk by having clear strategy from the top that this strategy takes effects of e- Dankly. Business rills: NOAA Knows much auto e-Dankly winter customer will have different characteristics then traditional.

Bank may not access credit at a distance effectively as they do in face to face. Security risk: The online banking work automatically through a password and a card. There is a risk to lose of confidential materials and can be made any unexpected Job. Reputation risk: For the fault of system, customer’s banking performance can be hampered and it could be responsible for reputation of parties. Crimes on E-Banking: 1 . Unauthorized access into network system. 2. The use of the laying devices . The implementation of computer viruses and other ways of disturbance. . Deactivate protected equipment 5. Forming, transferring, accepting, transforming, displaying and keeping some information 6. Access in the restricted automated systems. 7. Monitoring the protection of the software integrity. 8. Registration (logging) with reference to the forbidden resources 9. Cryptographic methods (Hiding information of computer system. ) E-Banking in Bangladesh: In recent years the banking industry has undergone massive changes in providing service to their customers by using information technology.

Developments in information technology and telecommunications have set in a motion an electronic revolution in the Bangladesh banking sector. Foreign Commercial Banks (Fibs) in Bangladesh are playing a pioneer role in introducing modern financial products and services. Private Commercial Banks (Pubs) have started to follow the same pattern. On the other hand Nationalized Commercial Banks (NCSC) and the Specialized Banks (CBS) could not yet show notable performance regarding the issues. But due to the demands of the time, they are now taking initiatives to launch modern and innovative products and services.

Currently most of the banks in Bangladesh are providing electronic products and services to their Customers’ . We cannot say they are completely following electronic way. Because they offer some of the functionalities of the complete electronic banking like intra-bank transactions, Letter of Credit (LLC) and foreign exchange etc. Banks products and services are categorized into two broad groups (I) Traditional Products and Services; and (it) Modern and Innovative Products and Services which is called E-banking.

Chapter Three (Presentation of Data Analysis) * Survey Design * Data Collection Procedure Presentation of Data Analysis survey Design The present study used a survey that was designed and conducted to find out the feasibility of the E-banking in Dacha based on different national, private commercial banks as well as foreign banks. A specifically designed questionnaire was used as a tool and the survey covered a sample of 20 respondents for the purpose of analysis.

These respondents are bankers of various banks; age group being 25th 65 years. The survey included queries on the following topics: * Education level of E banking service users * Whether customers are interested in using E banking service * Whether any robber faced while using the service * Nature of the problems faced * Infrastructure Facility * Critical factors for client satisfaction * Overall satisfaction level regarding the service Data Collection Procedure: Data Gathering Instrument: In the current study, the qualitative issue I. E.

E-banking operational problems and E-banking customer awareness was personalities and are measured in quantitative terms through a questionnaire designed and tested by employees of 4 different banks. They concerns that, ‘questionnaire is a prepared set of questions (or measures) used by respondents or interviewers to record answers data)’. This method provides a better understanding and reliability of data as it is a mixture of art and science which is providing an accurate instrument to collect and measure data on the variables of the study.

Questions Group I Perspectives I Justification I Group 1. IQ, SQ, SQ,SQ,SQ 1 Customer Accessibility I These questions help in gathering information regarding customer Acceptance and usage of provided online services. I Group 2. SQ, SQ, SQ 1 Practice and Profitability I These questions help in gathering data on perceived associated benefits, overall improvement in efficiency ND effectiveness of online banking system. I Group 3. SQ, QUO, IQ 1 I Service and Cost I These questions help in gathering information on the better services and reasonable cost.

I Group 4. QUO, QUO, QUO 1 Infrastructure Facility I These question help in gathering data on internet speed, governmental policies and customer trust on technology. I Group 5. IQ 5, QUO, IQ 7 | Technical Accessibility I These question help in gathering information about the advanced technology E banking services and sufficient technological support. I Group 6. QUO, QUO, QUO, QUO, QUO 1 Retained customer acceptance I These question help gathering data on trust about online data security, transaction security and transaction information.

I “Survey on E- Banking Practices in Commercial Banks of Bangladesh” We survey among twenty (20) employees on different bank to know about the E- Banking practices in Commercial Banks of Bangladesh and the current situation of E-Banking. Presentation of Data Analysis: * This Graph is showing Customer’s Adequate Knowledge about e-banking, and also known about the Accessibility, Trial uses facilities, Booth-based-Agent, etc. Can increase the number of e-banking customer’s or not.