online banking is a relatively new concept in Bangladesh. Like any new technology, along withthe potential, it brings with it a rush of questions relating to its design, acceptability and potentialrisks.In the global banking scenario, cheques are pass
now, and new methods of e-banking arewidely welcomed. If Bangladesh's banks are to stay within the competition, they will have tomove fast and initiate efforts to build the foundations for a good e-banking system.In the system of e-banking, funds are transferred through an exchange of electronic signals between financial institutions, rather than exchange of cash, cheques or other negotiableinstruments. With the expansion of global information and communication technology (ICT)infrastructure and internet, e-banking is set to play a pivotal role in the national economy. Newer modes of electronic transactions are being introduced rapidly, from ATMs, telephone banking, PC banking to internet banking. Developing alternative distribution channels isimportant in terms of reducing costs and improving competitiveness. It also increases thefinancial institutions' ability to retain and expand their existing customer base. The commonfactors associated with e-banking are ease of use, transaction security, convenience and speed.Currently, online banking provides five basic services worldwide. It allows the users to viewtheir account balance and transaction history, pay bills, transfer funds between accounts, requestcredit card advance and order cheques. Some banks also allow services such as stockmarkettransactions, and the submission of standardised accounting payment files for bank transfer, tothird parties.As technology evolves, different kinds of electronic banking system emerge, each bringing anew dimension to the interaction between the user and the bank. The ATM was the first well-known system that was introduced to facilitate the access of the user to his/her banking activities.Currently, the banks are considering online banking as a powerful "value added" tool to attractand retain new customers, while helping to eliminate costly paper handling and teller interactionsin an increasingly competitive banking environment.E-banking is now a global phenomenon. Apart from the developed world, the developingcountries are also experiencing strong growth in such transactions.The government's emphasis on building a digital Bangladesh, setting up an ICT park, raisingallocation for developing ICT infrastructure, waiving taxes on computer peripherals and other measures, including the automation program of the banking sector have brightened the prospectsof e-banking.Bangladesh Railway owns a high-speed optical fibre network (1,800 km) parallel to the railwaylines that cover most of the important parts of the country. This optical fibre network can be usedas the backbone network of e-banking in Bangladesh. Some banks are already using this network for conducting online transactions, ATM and POS services.