Thesis Paper: Supervised by

Thesis Paper
On
―E-banking: Present Scenario and Future Prospects in Bangladesh”
Course Code: FIN 5207
This Thesis Report is submitted as a part of completing Master of

Business Administration (MBA), Examination 2020, Department of
Finance and Banking, Begum Rokeya University, Rangpur.
SUPERVISED BY
Khairul Kabir Sumon

Assistant Professor
Department of Finance and Banking
Begum Rokeya University,
Rangpur.
PREPARED BY
Md. Shekh Farid Islam
ID No. 021920062
Registration No: 000006494
Session: 2019-2020
Begum Rokeya University, Rangpur.
Date of Submission: ……..

DEDICATED TO
MY BELOVED PARENTS
Letter of Transmittal
Date……….
To
Md. Khairul Kabir Sumon
Assistant Professor
Subject: Submission of Thesis paper
Dear
Sir,
It is a great pleasure for me to submit my Thesis Report on " E-banking: Present
Scenario and Future Prospects in Bangladesh which is essential part of the

completion of my MBA program. All the information is done with utmost sincerity
and honesty. I have tried to my best with match my theoretical knowledge. I also
confess that my research has some limitations, because I am still a student and I am in
a process of developing my skills. So, I hope that you will be kind enough to consider
the limitations of this research.
I shall be highly obliged if you are kind enough to receive this thesis report
and provide your valuable judgment.
Sincerely yours

ID No. 021920062
Reg. No: 000006494
Session: 2019-2020
Declaration
I declare that the presented Thesis Paper on " E-banking: Present Scenario and
Future Prospects in Bangladesh” is my own research work, under the supervision
of Khairul Kabir Sumon , Assistant Professor, Department of Finance and
Banking, Begum Rokeya University, Rangpur.
I, also confirm that, the thesis report has been prepared only for my academic
requirement not for any other purpose. I also ensure that accurate data has been
considered.
Sincerely yours

ID No. 021920062
Reg. No: 000006494
Session: 2019-2020
Acceptance Letter
This is to certify that the Thesis Report on‖ E-banking: Present Scenario and
Future Prospects in Bangladesh” has been prepared by Md. Shekh Farid

Islam, ID: 021920062, Registration No: 000006494, Session: 2019-2020,
Department Finance and Banking, Begum Rokeya University, Rangpur under my
supervision and guidance.
I wish his success at every sphere of life.

………………………………
Khairul Kabir Sumon
Assistant Professor
Acknowledgement
First and foremost I wish to express my best gratitude to the supreme God who has
given me strength, patience and ability to perform this study. I am highly grateful to
my most respected supervisor Sir Khairul Kabir Sumon, Assistant Professor,
Department of Finance and banking, Begum Rokeya University, Rangpur for his
adorable supervision, scholastic guidance and constructive discussions through this
study.
I am very much grateful to my father, mother and other family members for their
unbound forbearance and continuous encouragement in sustaining my thesis report.
At last, I am also express my hearted thanks to my friends specially who have

helped me providing necessary information and gave inspiration to complete my
thesis report.
Abstract
Financial liberalization and technology revolution have allowed the developments of new
and more efficient delivery and processing channels as well as more innovative products
and services in banking industry. Banking institutions are facing competition not only from
each other but also from non-bank financial intermediaries as well as from alternative
sources of financing. Another strategic challenge facing banking institutions today is the
growing and changing needs and expectations of consumers in tandem with increased
education levels and growing wealth. Consumers are becoming increasingly discerning and
have become more involved in their financial decisions. For many consumers, electronic
banking means 24-hour access to cash through an automated teller machine (ATM) or
Direct Deposit of paychecks into checking or savings accounts. But electronic banking
involves many different types of transactions. Electronic banking, also known as electronic
fund transfer (EFT), uses computer and electronic technology as a substitute for checks and
other paper transactions. EFTs is initiated through devices like cards or codes that let you,
or those you authorize, access your account. Many financial institutions use ATM or debit
cards and Personal Identification Numbers (PINs) for this purpose. Some use other types of
debit cards such as those that require, at the most, your signature or a scan. The study was
designed to investigate the impact of e- banking in Bangladesh. There appear a few
extensive study on e-banking practices has been conducted in Bangladesh. But no
comprehensive study has yet been conducted especially on security of e-banking in
Bangladesh.
Table of Contents
CONTENTS Page
No
Chapter One: Introduction 1-9
1. Introduction 1
1.1 .Concept of Banking 2-3
1.2. Concept of E-banking 3-4
1.3. Scope of Banking 4-5
1.4. Benefits of E- Banking 5-6
1.5. Origin of the Study 6-8
1.6. Objectives of the Study 8
1.7. Justification/Scope of the Study 8
1.8. Methodology 9
1.9. Limitations of the Study 9
Chapter two: Literature Review 10-22

2.1.Banking Sector and The Adaptation of E-Banking 10
2.2. World Wide E-Banking 11
2.3. World Wide E-Banking Facilities 11-16
2.4. E-Banking product available in Bangladesh 16-20
2.5. Impact of E-Banking on Traditional Services 20-21
2.6. Role of E-Banking in the Banking Sector 21-22
Chapter three: Overall Conceptual Review of E-Banking 23-30

3.1. Electronic Banking 23
3.2. Types of E-Banking 24-26
3.3. Required Physical Infrastructure For E-Banking 26-30
Chapter Four: Findings & Analysis of the Study 31-48

4.1. Present Scenario & Status of E-Banking in Bangladesh 31-44
4.2. Prospects of E-Banking in Bangladesh 44-48
4.3. Constraints to E-Banking in Bangladesh 48
CHAPTER-ONE
1. Introduction:
As an Internet based technology, e-banking is new and a quite unfamiliar for some
people in Bangladesh due to the digital divide and the different level of internet
experience and environments. E-banking services have been available in Bangladesh
since 2001. As of 2013, All the bank has minimum E-banking services. Almost most
of the bank provides wide range of e-banking services rest of the bank are providing
few e-banking services.
In Bangladesh research has been done on electronic commerce issues, computer

usage, Internet usage, telephone and electronic banking. The reason for the lack of
complete adoption of e banking in developing countries like Bangladesh is an
important research work. In other words, despite this growth of IT Worldwide, some
Bangladeshi banks continue to conduct most of their banking transactions using
traditional methods. Understanding the reasons for the lack of such technological
innovation in developing countries such as Bangladesh will develop a fruitful
research. The aim of this research is to look at the emergence, advantages and
acceptance of e-banking in Bangladesh. This report is aimed at to determine
economical prospects of e-banking and to explain the present scenario of banking
sectors in Bangladesh and at the same time it demonstrates the scope and benefits of
e-banking compared with the existing system. This report also tries to present actual
situation of e-banking in the marketing point of view in Bangladesh.
E-banking is now a global phenomenon. The developed country as a part and parcel
of their economy is now using e-banking. A strong banking industry is an important
in every country and can have a significant affect in supporting economic
development through efficient financial services (Salehi and Azary, 2008; Salehi et.
al., 2008).
As a third world developing country, Bangladesh is far behind to reach the expected
level of global banking system. At present the banks in Bangladesh are using the
limited electronic banking services. E-banking product and services include wholesale
products for corporate customers as well as retail and fiduciary products for individual
customers. Foreign commercial banksand private commercial banks are relatively in a
better position to provide online banking services. Dutch bangla bank is acting as a
pioneer in this sector.
1.1. Concept of Banking:
Finance is the life blood of trade, commerce and industry. Now-a-days, banking
sector acts as the backbone of modern business. Development of any country mainly
depends upon the banking system. The term bank is either derived from old Italian
word ― Banca” or from a French word ―banque” both mean a Bench or money
exchange table. In olden days, European money lenders or money changers used to
display (show) coins of different countries in big heaps (quantity) on benches or
tables for the purpose of lending or exchanging. A bank is a financial institution
which deals with deposits and advances and other related services. It receives money
from those who want to save in the form of deposits and it lends money to those who
need it.
Oxford Dictionary defines a bank as "an establishment for custody of money, which
it pays out on customer's order. So Bank as a financial intermediary have some
unique characteristics such as—
 Dealing in Money :
Bank is a financial institution which deals with other people's money i.e.
money given by depositors.
 Individual / Firm / Company:
A bank may be a person, firm or a company. A banking company means a
company which is in the business of banking‘s
 Acceptance of Deposit:
A bank accepts money from the people in the form of deposits which are
usually repayable on demand or after the expiry of a fixed period. It gives
safety to the deposits of its customers. It also acts as a custodian of funds of
its customers.
 Giving Advances:
A bank lends out money in the form of loans to those who require it for
different purposes.
 Payment and Withdrawal:
A bank provides easy payment and withdrawal facility to its customers in
the form of cheques and drafts, It also brings bank money in circulation.
This money is in the form of cheques, drafts, etc.
 Agency and Utility Services :

A bank provides various banking facilities to its customers. They include
general utility services and agency services.
 Profit and Service Orientation:
A bank is a profit seeking institution having service oriented approach.
 Ever increasing Functions:
Banking is an evolutionary concept. There is continuous expansion and
diversification as regards the functions, services and activities of a bank.
 Connecting Link:
A bank acts as a connecting link between borrowers and lenders of money.
Banks collect money from those who have surplus money and give the same
to those who are in need of money.
 Banking Business:
A bank's main activity should be to do business of banking which should not
be subsidiary to any other business.
 Name Identity:
A bank should always add the word "bank" to its name to enable people to
know that it is a bank and that it is dealing in money.
1.2 : Concept of E-banking:
The term Internet Banking or E-Banking Internet both are used as supplement. E-
Banking is the one of the major partof E-Financing. Hertzumet al. (2004) defined E-
Banking as web-based Banking. In other words E-Banking refers to the banking
operations, which is done over World Wide Web. However, more comprehensive
and well-established definition is given by the United Nations Conference on Trade
and Development (UNCTAD). This definition covers almost all area of E-Banking.
Internet banking refers to the deployment over the Internet of retail and wholesale
banking services. It involves individual and corporate clients, and includes bank
transfers, payment settlements, documentary collections and credits, corporate and
household lending, card business and some others (UNCTAD, 2002) .
E-Banking information architecture is modeled as client-server architecture. A client

operating through a PC linked to Internet opens the special E-Banking site of his bank
and then, using a set of special secure numbers, gets access to his bank accounts and
has the opportunity to consult them, as well as to make all necessary payments and
transfers form his personal accounts. When the transaction number is exhausted the
bank sends him a new set of numbers for his individual transfer sessions. In some case
the bank provides customized software. The bank software program can also be
utilized offline, for example for preparing the payment orders offline and then making
the actual order online. The client receives all numbers separately, mainly by mail.
The bank also provide clients with similar facilities in its premises so that clients can
use the bank equipment such as an ATM or a special facility linked to the main
terminal facility called MultiMate, permitting them to effect
the same account examination, payment and transfer operations without consulting
the bank staff.( Abdul, Mohammad,Md. Main )
1.3 : Scope of E- Banking:

Today the customer demands the services of banks 24 hours where he lives even he is
in the airplane. Now in this modern age the entire banking structure has been changed
due to widespread internet technology. Now all the business like commerce, trade,
import, export, purchase and sale of goods is relying upon electronic banking. By
using the advance electronic technology the banking services are economical.
There is a saving time an saving of money in the use of E-banking. If any country
wants to work in the world market, it will have to improve the banking services at
international level because old traditional banking is not acceptable in the changing
global economy. The online banking facility has been provided by the large number
of commercial banks. On other hand credit card facility is also available in the
various commercial banks. Now every bank wants to attract the customers and for
this
purpose the offers the latest facilities so seem that no any.Bank will survive in the
market if he fails to provide update facilities.
1.4 : Benefits of E- Banking:
Now it is also called on line or home banking electronic banking was stared with the
use of proprietary software. Following are the important advantages of electronic
banking :
 Paper Work Reduced:

The traditional procedure of banking is manual and paper based. Electronic
banking is gradually replacing the paper transactions in the banks which has
reduced the paper work.
 Easy Transactions:
Electronic banking has reduced the problems of the customers like writing
cheques, filing taxes, and transforming of cash. Now in ATM facility there is
no need of cheque book.
 Security:
Electronic banking provides the safe system of payment. Now transactions are
made in the accounts through internet.
 Saving Of Time:
Electronic banking has saved the time and money of the customers and also
the bank. Now burden of work on bank employees has been also reduced.
were hired at higher wages, so operating cost was very high. Now by using
electronic banking the number of employees has been reduced.
 Reduction In Cost :
In case of manual banking, large number of employees were hired at higher
wages, so operating cost was very high. Now by using electronic banking the
number of employees has been reduced.
 Market Expanded :
Due to electronic banking, national international market of various goods and
services has been expanded. Now we can purchases and make payment in any
place in the world.
 Increase In Customers :
As the banking industry is expanding due the modern facilities, it is attracting
more and more customers. So number of customers are increasing day by day.
 Branches Reduced :
Now there is no need to open the branches on every place in the city because
due to electronic banking facilities, there is no rush of customers in the banks.
Because there is no need to visit the bank physically. So heavy cost of opening
the new branches has been reduced and facilities are provided at low cost.
 Checking of Account:
Every customer can check his balance of account sitting at home and
makes the payments without traveling. It saves his time and expenses.
 Utility Bills Payment:

Bills, like telephone, gas, electricity and water can be easily paid to the
concerned departments without going to the bank physically. Even he is sitting
in any other country, he can make the payment.
 Transferring Of Money:
There is no need of writing the deposit slip cheques and drafts. By using the
electronic banking money can be transferred easily.
 Credit Cards:
It is also very important facility for the customers that he can purchase the
goods and ca make the payment by using the credit cards
1.5 : Origin of the Study:

Thesis and research program is a scope for acquiring knowledge after successful
completion of academic curriculum. Theoretical knowledge gets a complete shape
only when it is applied in a practical field.
Every organization is concerned about the competence of its executive to cope with
the technological advances in industrial and commercial development in the fast-
moving global environment. The capability of the executive must be enhanced so as
to make them efficient and effective in the execution of their duties and
responsibilities. The principal emphasis on MBA program has been given on the
operation of business organization mostly in private sector. The objective of this
program is to prepare students in such a manner so as to equip them with accounting
and financial skills, competence in to depth knowledge of business administration so
as to enable them to meet any challenging situation and to work with the competence
in the competitive business environment.
During my research period; I‘ve tried my best to get knowledge about the overall
operations of e-banking, impact in our economy & its future prospect with our
banking sector.
This program is, in fact, is at endeavor to make the students familiar with the real
business situation and to prepare themselves to match their theoretical knowledge
with practical field. My research with the name of “E-Banking in Bangladesh;
Present Scenario and Prospects”. Exposure to the business world and acquiring
practical knowledge are also the main objective of this research.
E-banking is the waves of the future. It provides enormous benefits to consumers in

terms of case and cost of transactions, either through internet, telephone or other
electronic delivery channels. For many consumers, electronic banking means 24-
hours access to cash through an Automated Teller Machine (ATM) or Direct Deposit
of paychecks into checking or savings accounts. But electronic banking now involves
many different types of transactions. E-banking is a form of banking where funds are
transferred through an exchange of electronic signals between financial institution,
rather than exchange of cash, cheeks or other negotiable instruments. With the
expansion of global Information and Communication Technology (ICT) infrastructure
and the internet, e-banking is set to play a pivotal role in the national economy,
proper software, infrastructure, cyber low and skilled manpower are important for the
implementation of e-banking in the country.
This research is an overview of the issues associated with e-banking and I have tried
to explore the future challenges and prospect in Bangladesh.
1.6. Objectives of the study:

In this research there are basically two types of objectives. Those are:
1.6.1 : Main Objective
 To examine the present status of E-banking in Bangladesh.
 To examine the Future prospects of E-banking in Bangladesh.
1.6.2 : Specific Objectives
1.To identify various forms of E-banking available in Bangladesh.
2.To identify various economic aspects of e-banking in Bangladesh.
3.To identify the future challenges posed by the E-banking in Bangladesh.
There are several other objectives to conduct the study.

These are:
 To fulfill the partial requirement of the ― Research paper(MGT5207) ‖
course offered in MBA program.
 Enhance individual performance.
 To meet the curiosity in this stated subject
1.7 : Justification/scope of the study:
This report presents an initial phase of a sustainable research program and as such has
limited itself in terms of research design. Firstly, non-probability sampling method is
adopted for research, meaning that statistical inferences regarding the population
may not be made accurately. Secondly, data collection was confined to only
secondary data collection because of short time span of research. Thirdly, it was time
consuming and was difficult to find out spontaneous sources of data. Again, there was
limited secondary literature available on the topic that restricted me to explore the
sector related to it.
1.8 : Methodology:
Every work has a methodology. On the way of the formation of this report, it has a
methodology. The study is mainly based on secondary data related to E-banking.
Secondary data and information have gathered from Books, Journals, research paper
etc. This is an exploratory research based on – Data from Secondary Data Souces.
Secondary data obtained through the Net, books and related journals including
different publications: (i) Bangladesh Institution of Bank Management (ii) Bank for
International Standard Working (iii) Papers International and local Publications (iv)
Different seminar papers (v) Information from Internet (vi) UNCTAD and WTO
publication. Here I also collect lots of information through banks journals.
And also some secondary data are collected from different publication material and
web site as well as the books and material from different libraries, the hand note of
the various seminar and research related to the issue are taken into account that
includes the library of BIBM, BANBASE, Science Laboratory, DCCI library. The
secondary data have been also collected from research material of the following
sources; DBBL–Products and Software, EBL–Survey Report, IBA–Feasibility Report,
WTO/UNCTAD–Secret of ecommerce.
1.9 : Limitations Of the study:
To conduct the research, there have come some limitations.
 One sort of limitation is time limitation. To conduct a thorough research,
sufficient time is required. But the time that has been assigned to complete the
research is less than necessary. In spite of that, an allocation of the given time
has been made as per required.
 Another limitation is the lack of availability of the intended information. That
is, it is not that much easy to collect needed information. Because the banks
are not willing to disclose their internal report or internal information to the
people coming from outside of the organization
 Lack of experience acted as constraints in the way of careful exploration
on the topic
CHAPTER TWO
LITERATURE REVIEW
2.1: Banking Sector and The Adaptation OF E-Banking:
Banking has never been more important to our society than it is today. The way Bill
Gates (2008) announced that banking is essential, banks are not . This quotation
means that the traditional bank branch is going to vanish in order to be surrogated by
electronic banking which continues to attract new users. The banking industry
believes that by adopting new technology, the banks will be able to improve customer
service level and tie their customers closer to the bank. Meanwhile, the banking
industry has been also looking for new methods to expand its customer base and to
counteract the aggressive marketing effort of those non-traditional banking entities
(Graven, 2000). Larger banks that maintain expensive branch networks tend to have
the greatest incentive to adopt e-banking services. In comparison, smaller banks have
higher start up costs and tend to have a high initial technological cost in developing e-
banking services (Treadwell 2001). The application of e-banking has been proven as
an effective way to reduce the costs of operation for the financial institutions. For
instance, e-banking services will allow banks to reduce expenditures on physical
structures. It is believed that the e-banking will help banks to cut costs, increase
revenue, and become more convenient for customers (Halperin 2001). Another
important benefit from e-banking is a more effective information collection and
management. A combination of a low percentage of customers using e banking
services on a consistent basis and a relatively low start-up cost in developing e
banking services in the banking industry–will make the impact of e-banking (positive
or negative) quite limited on financial institutions (Marenzi, et al., 2001). Finally, the
development of e-banking service has encouraged the adoption of a decentralized
approach to give banks more needed flexibility to distribute Internet access to a much
larger number of employees and potential customers.
References:
Mohammad Azizul Baten, PhD , Anton Abdulbasah Kamil, PhD , E-Banking of
Economical Prospects in Bangladesh, An open access Internet journal
(http://www.arraydev.com/commerce/jibc/) Journal of Internet Banking and
Commerce, August 2010, vol. 15, no.2
(http://www.arraydev.com/commerce/jibc/)
2.2 World Wide E-Banking Facilities:
With the extensive technology innovation and telecommunication, we have seen new
Financial distribution channels increasing rapidly both in the numbers and form
ATMs, telephone banking .PC banking to internet banking. (Earring Wood and Story,
1996).
Developing alternative distribution channels is not only important in terms of
reducing costs and improving competitiveness, but also in terms of financial
institution‘s ability to retain the existing customer case. (Kimball and Gregor, 1995)
as well as to attract new customers.
Sathye (1999) proposed a model for Internet Banking in Australia is significantly
influenced by variables of system insecurity, case of use awareness of service and its
benefits, reasonable price, availability of infrastructure and resistance to change. The
transformation from traditional brick-and-mortar banking to E-Banking has been
Automatic Teller Machine (ATM) and thus the retail banking industry witnessed
significant and extensive change. Formally, E-banking comprises various formats or
technologies, including telephone (both land line and cell phone banking, direct bill
payment (EFT), and PC or internet banking (Power, 2000). Weitzman, (2000), Lassar,
Manolits and Lassar, (2005), Ehou and Chou (2000) identified five basic services
associated with online banking: view account balances, and transaction histories,
paying bills, transferring funds between accounts, requesting credit card advance, and
ordering checks. Majority of banks of banks is planning to introduce ICT for
integration of banking service and new finance service, which will play a vital role in
bringing efficiency in financial sector (Raihan, 2001). The most commonly factors are
ease of use, transaction security, convenience and speediness (Wan, Luk and Chow,
2005).
Organization theorists and practioners have defined e-banking in various ways.
A Survey of Electronic Banking, Electronic Cash and Internet Gaming (2003), has
defined electronic banking as ―an umbrella term for the process by which a customer
may perform banking transactions electronically without visiting a brick and mortar
institution‖. The following terms all refer to one form or another of electronic
banking: personal banking,(pc) virtual banking, on line banking, home Banking,
remote electronic banking, and phone banking are the most frequently used
designations, (Joris, Claessens, Valentine Dem et.al,2001),on line electronic banking
system give every body the opportunity for easy access to their banking activities.
These banking activities may include; retrieving an account balance, money transfers
(Between a user‘s accounts, from user‘s account to someone else‘s account) retrieving
an accounting history. Some banks also allow services such as stock market
transactions, and the submission of standardized accounting payment files for bank
transfer, to third parties, As technology evolves, different kinds of electronic banking
system emerge,
each bringing a new dimension to the interaction between user and bank. The ATM is
the first well-known system that was introduced to facilitate the access of the user to
his banking activities, (M. Rahman, 2003), E-banking is a form of banking where
funds are transferred through an exchange of electronic signals between financial
institution, rather than exchange of cash, checks or other negotiable instruments
common wealth bank of Australia, (2006) defined E- banking as ―a range of banking
services that utilizes electronic equipment‖. Electronic equipments are ATM machine
card (plastic), PIN, password, code or net code etc. With the extensive technology
innovation and telecommunication. We have seen new financial distribution channels
increasing rapidly both in the numbers and form, from ATM‘s, telephone banking, PC
banking to internet banking. A broad range of financial distribution channels must be
available to deliver varying services needs of customers
segments (Earring wood and story, 1996)
Developing alternative distribution channels is not only important in terms of
reducing costs and improving competitiveness but also in terms of a financial
institution‘s ability to retain the existing customer case (Kimball and Gregor, 1995) as
well as to future attract new customers
While the trend within the banking industry is to replace human tellers with self-
service distribution channel‘s. the strength of customer intentions for usage of human
tellers within the next two years support the concept that the branch will still play an
instrumental rate in the delivery of services to customers in the future.
(Greenland,1995; Woodruff, 19*95; Thornton and White, 2000).
Sathye (1999) proposed a model for Internet Banking Adoption, which argued that the
Intention of Internet Banking in Australia is significantly influenced by variables of
system insecurity, case of use awareness of service and its benefits, reasonable price,
availability of infrastructure and resistance to charge.
The Willis Report (1997 in Sathye, 1999) Stated that the technology must be
reasonably priced relative to alternatives for customers to adopt. Otherwise the
acceptance of the new technology may not be viable from customer‘s stand point.
Customers today are more conscious of the expenses associated with the banking as
they are generally better informed about alternative option. The total costs incurred in
using Internet Banking must be minimal or competitive (Joyawardhena and foley,
2000).
Howard and Moore (1982) reported that consumers must be aware of the new brand
before adoption. Therefore it is important factor that the boxes have to create
awareness on internet banking to the consumers. Adoption means acceptance and
continued use of aproduct, service and idea. Customers go through a process of
knowledge, persuasion, decision and confirmation before they adopt the product or
services
This is related to user friendliness and ease of navigation as well as simple institutions
to use the service.
E-banking is the waves of the future. It provides enormous benefits to consumers in
terms of case and cost of transactions, either through Offer the internet banking; the
greater the awareness level among customers and therefore the higher will be internet
banking adoption. Besides awareness, the serviceprovided by the banks should be
perceived to be innovative with high quality and user friendliness to meet an
individual‘s expectation. Cooper (1997) reported that case of use of innovation
product or service as one of the three important characteristics for adoption from the
customer‘s perspectiveinternet, telephone or other electronic delivery channels
(Nsouli and Schaechter, 2002)
E-banking development would lead to two classes of surviving banks, which are very
large banks and small niche ones (Dewan and Seismanm, 2002). Through the E-
banking, smaller banks could compete by offering portals to the services offered by
larger banks (Holland and Westwood, 2001) with this development, banks could use
E-banking to focus an customer need in order to gain the strongest competitive
advantage (Wind,
2001).The transformation from traditional brick-and-mortar banking to E-banking has
been automatic teller machine (ATM) has the retail banking industry witnessed such
significant and extensive change. Formally, E-banking comprises varies formats or
technologies, including telephone (both landline and cell phone banking, direct bill
payment (EFT), and PC or internet banking (Power, 2000); Weitzman, 2000; Lassar,
Manolits and Lassar, (2005), Ehou and Chou (2000) identified five basic services
associated with online banking: view account balances, and transaction histories;
paying bills, transferring funds between accounts; requesting credit card advanced;
and ordering checks.Majority of banks is planning to introduce ICT for integration of
banking service and new finance service, which will play a vital role in bragging
efficiency in the financial sector (Raihan, 2001). The most commonly factors are ease
of use, transaction security, convenience and speediness (Wan, Luk and Chow,
2005).ICT networking has offered a wide range of delivering channel‘s in retail
banking. Banking institutions need to exploit opportunities that arise from these
development and changes to remain competitive. The successful financial institutions
in the future will be those that are able to leverage most from the information and
communication technology revolution. Increasingly consumers are also demanding
more efficient banking services are becoming more discrediting of the power that the
technology brings. The winners will be those financial institutions that are able to
harness on the Capability of ICT in making strategies decisions in terms of inability
leader alignment of business, enhancing organizational capacity and capability, risk
management and building better customer relationships CC the rapid pace of
advancement.
A survey of electronic cash, electronic banking and internet gaming (2002) reported
that the term electronic cash, e-cash or e-money refer to electronic payment schemes
that enable consumer to store and redeem financial value. They operate via stored
electronic units of value. Paid for in advance by conventional money and representing
equivalent units in real currency, these funds can be transferred between vendors and
individuals using compatible electronic system, in some cases consumers report to
banks or other financial intimidators. E-cash (e-money) comes in two forms: smart
card e-cash and computer e-cash.
References:
1.Ali Mohammad 1.Raihan,A,2001,privatization of Telecom Industries
and development of IT industry in Bangladesh. A Rountable paper presented
at BIBM. 2.Sathye M (1997), “Internet Banking in Australia”, Journal of Internet
Banking
and Commerce, Vol. 2, No. 4.
3.Sathye M (1999), “Adoption of internet banking by Australian consumers: an

empirical investigation”, International Journal of Bank Marketing, Vol.17,
No.7, pp.324-334.
Mahboob, “Management Information Systems for today’s banking
business: Bangladesh Perspective” South Asian Journal of Management, India,
Vol-07,
No.1&2
5.Bank, David, “Smart Cards are open to new attack by Hackers, Say Israeli
Researchers”.
Wall Street Journal, October 21, 1996, p-17 Basel Committee, “Electronic Money:
Provider Issues and Regulatory Structure”. Report by the Working Committee on
payments and settlement systems, Basel, June, 1996.
6.Barbara A. Good, “E-Money” Working Paper , Federal Reserve Bank of

Cleveland ,
Economic Research Department, August,(1997), pp-1-10.
7.Bauer, Paul W., “Making payments in Cyberspace”, Economic Complementary,

Federal
Reserve Bank of Cleveland, October 1, 1995
8.Block Valerie, “Smart Card Venture, once written off, Is Perking Up.”, American
Banker, Vol-161, no.186, September 27, 1999, Online Edition Castaneda, Laura,
“Cashless future”, San Francisco Chronicle, September 25, 1996, p-1
9.Denny S., “Electronic Commerce Challenge”, Journal of Internet Banking and

Commerce, Vol.3 no.3, June 1998 Federal Deposit Insurance Corporation Division
of Supervision, U.S.A (1999) “Electronic Banking: Security and Soundness
Examination Procedures”
10.Graham George, “world tries a new way to pay.” Financial times, November
8, 1996, p-3
11.Khan, A.R,(2007) “Bank Management” 4th ed. Ruby Publications, pp-312-347
12.Koprowski, Gene (1996), “The money changers: Digital Cash Innovators Talk
Bank,
Bits, Bytes, and Bucks”, Fortune ASAP, August 28 pp-68-74.
2.4 E-banking product available in Bangladesh:
E-banking product and services can include wholesale products for corporate
customers as well as retailand fiduciary products for individual customers. Ultimately
the product and services obtained throughinternet banking may mirror product and
services offered through other bank delivery channels. A brief description of e-
banking products are described below
Automated teller machine:
An automated teller machine (ATM) is a computerized telecommunication device that

provides a financial institution‘s customers with a method of financial transaction in a public
space without a need for a human clerk or a bank teller.
Debit card:
A debit card is a plastic card which provides an alternative payment method to cash.
While making purchases. The amount of a transaction is typically displayed on a card
reader, after which the customers wipes the card and enters the pin number. There is
usually a short delay while the EFTPOS (electronic fund transfer at point of sale)
terminal contact the computer network (over a phone line and mobile connection) to
verify the authorize the transaction.
Credit card:
A credit card is a system of payment named after the small plastic card issued to users
of the system. A credit card is different from a debit card in that it does not remove money
from the user‘s account after be very transaction. In the case of credit card the issuer
lends money to the customer. It is also different from a charge card though this name
is sometimes used by the public to describe credit cards. This requires the balance to
be paid in full each month. In contrast the credit card allows the customer to revolve
their balance at the cost of having interest charged. Credit card facility fully cannot be
extended in the country, as common gateway between financial cannot be established.
Pricing mechanism of the products of country is not competitive,
rater it is very much volatile. This creates a negative impact on the customers‘
Point of sale (POS):
This means a retail shop or a checkout counter in a shop or a variable location where a
transaction occurs in this type of environment. Additionally point of sale sometimes
refers to the electronic cash register system being used in an establishment. Point of
sale system are used in restaurants, hotels and stadiums as well as retail environment
in short, if something can be sold, it can be sold where a poin of sale system is in use.
Check Truncation:
This is such a service in which a financial institution doesn‘t return the rejected checks with
the monthly statement to their customer, rather they provide statement of rejected
checks with their monthly statements. The banks store the rejected checks for a certain
time period (usually 90 days). During this time period a customer can adjust /rectify
the account if any imbalance is found between his own record and the bank statement
provided by the bank. After the expiration of the stipulated period the rejected checks
are spoiled and the bank maintains a micro film copy for a period.
Home banking:
At first bank introduced telephone bill payment (TBP) so that customer could be able
to do their banking activities from their home. The next version for the home banking
was Video Home Banking (VHB). The internet is expected to be a major factor for
home banking.
Retail Automated Clearing House Service:
It is an electronic network for financial transaction. ACH process large volume of

both credit and debit transactions which are originated in batches. ACH credit
transfers including direct deposit, payroll payment and payments to contractors and
vendors. ACH debit transfers including customer payment of insurance premiums,
mortgage loans and other kinds of bills. Businesses are also increasingly using ACH
to collect the customers‘ online rather than accepting credit or debit cards.
Wire transfer:
Wire transfer is a process which ensures fast and appropriate timing of fund transfer
from the sender tothe recipient. This kind of transfer of money could be either within
the country or abroad. Funds aretransferred under the following network:
 FED wire federal reserve communication system)
 Bank wire
 CHIPS (clearing house interbank payment service)
 SWIFT ( the society for worldwide interbank financial telecommunication)
M remittance
For sending foreign remittance four nationalized banks and fifteen private banks are
working collaboratively with mobile phone service operators. Recently remittance
could be sent in Bangladesh by banking channel through account transfer (normally
takes 3 working days) or in the form of instance cash (takes 24 hours). Foreign
resident people can send their money and PIN (personnel identification number)
through mobile phone. As a result money transfer becomes relatively easy, quick
and hassle free. But this system also superseded by M Remittance system. Mobile
remittance service Remittance was introduced in the country opening doors to
millions migrants workers to help transfer their hard – earned money easily,
effectively and most importantly ,swiftly. The first ever remittance service for
Bangladesh was jointly launched by two local banks – Dhaka Bank ltd. and Eastern
Bank ltd. – and the country‘s second largest mobile operator ,Banglalink.
Security measures of e-banking:
The security of a system is the extent of protection against some unwanted occurrence
such as the invasion of privacy, theft and the corruption of information or physical
damage. At this system is developed through the internet there is a big chance of
hacking through our system. Current browsers counter security threats with a network
communication protocol called secured sockets layer (SSL). SSL is a set of rules that
tells computers the step to take to improve the security level of the communication.
Corporate automated clearing house:
The automated clearing house (ACH) is an electronic network for financial

transaction. ACH processes large volumes of both credit and debit transactions.
Which are originated in batches other retail and fiduciary products and services may
include balance inquiry, funds transfer, downloading transaction information, bill
presentment and payment, loan application, investment activity and other value added
services.
Other E-banking services available in Bangladesh:

 Core Banking
 Cluster Banking
 Phone Banking
 SMS Banking
 Various Cards
 ATM Shared (VISA/MASTER)
 ATM own (VISA/MASTER)
 PC Banking
 Banking KIOSK
 Offline Branch Computerization E-payment
The credit card is available from VISA, MasterCard and VANIK. Some foreign
banks provide electronic fund transfer (EFT) services. It is at an early stage and
used on a very limited scale. Microchips embedded Smart Card is also becoming
popular in the country, particularly for utility bill payment. Automated teller
machine (ATM) is expanding rapidly in major cities. A group of domestic and
foreign banks operate shared ATM network, which drastically increase access to
this type of electronic banking service. The network will gradually be extended to
other parts of the country.
References:
Mohammad Azizul Baten, PhD , Anton Abdulbasah Kamil, PhD , E-Banking of
Economical Prospects in Bangladesh, An open access Internet journal
Journal of Internet Banking and Commerce, August 2010, vol. 15, no.2
2.5. Impact of E-Banking on Traditional Services:
One of the issues currently being addressed is the impact of e-banking on traditional
banking players. After all, if there are risks inherent in going into e-banking there are
other risks in not doing so. It is too early to have a firm view on this yet. Even to
practitioners the future of e-banking and its implications are unclear. It might be
convenient nevertheless to outline briefly two views that are prevalent in the market.
The view that the Internet is a revolution that will sweep away the old order holds
much sway. Arguments in favor are as follows‘-banking transactions are much
cheaper than branch or even phone transactions. This could turn yesterday‘s
competitive advantage - a large branch network, into a comparative disadvantage,
allowing e banks to undercut bricks-and-mortar banks. This is commonly known as
the "beached dinosaur" theory. E banks are easy to set up so lots of new entrants will
arrive. ‗Old-world‘ systems, cultures and structures will not encumber these new
entrants. Instead, they will be adaptable and responsive. E-banking gives consumers
much more choice. Consumers will be less inclined to remain loyal. E-banking will
lead to an erosion of the ‗endowment effect‘ currently enjoyed by the major UK
banks
.Deposits will go elsewhere with the consequence that these banks will have to fight
to regain and retain their customer base. This will increase their cost of funds,
possibly making their business less viable. Lost revenue may even result in these
banks taking more risks to breach the gap.
2.6.Role of E-Banking in the Banking Sector:

Electronic banking (e-banking) is the newest delivery channel of banking services.
The definition of e-banking
varies amongst researches partially because electronic banking refers to several types
of services through which a bank‘s customers can request information and carry out
most retail banking services via computer, television or mobile phone (Daniel, 1999;
Mols, 1998; Sathye, 1999). Burr, 1996, for example, describes it as an electronic
connection between the bank and customer in order to prepare, manage and control
financial transactions. Electronic banking can also be defined as a variety of the
following platforms: (a) Internet banking (or online banking), (b) telephone banking,
(c) TV-based banking, (d) mobile phone banking, and (e) PC banking (or offline
banking). In this paper, the ATM (Automated Teller Machine) channel is also added
to the research. The channels comprise two major groups: the traditional channels and
e-channels. (1) The traditional channels are defined on the basis of the type of human
assistance: teller, retail or corporate manager. (2) E-channels are divided into 4 sub-
groups on the basis of how the channel is seen by clients, with some exceptions based
on the technological processes of transaction execution: Internet based (online bank
for corporate clients Telehansa.net, online bank for private clients Hanza.net, and
offline bank for large corporate clients Telehansa), card-related (ATM – Automated
Teller‘s Machine and POS –payment terminal), Phone channels (call center, IVR,
mobile bank) and Automated channels (―virtual‖ bank core channels where
direct debit and incoming payments are effected). Services are one of the primary
benefits which a customer looks for while adopting a new channel. The consumers
consider the benefits and weigh them against the costs associated. The Internet offers
a lot of benefits to consumers, like any time anywhere banking, updated information,
convenience, faster transaction, etc. E – Banking services are replacing traditional
services and creating a new scale in transformation. In the initial stage, e- channels
were introduced in metropolitan cities and urban areas, but recently some banks have
started focusing on rural and semi urban areas. New private sector banks are taking
the lead in capturing rural and semi urban sector. The different e- channels such as
ATMs, Credit and debit cards, Tele-banking, Mobile – banking, online – banking and
Smart Cards, are changing the face of the retail banking sector. New private sector
banks and foreign banks are attracting customers in a big way. The potential
customers and big companies are shifting their accounts from traditional banks (not
fully computerized) to E - banks (fully computerized and provide different e –
channels). If traditional banks, mostly public sector banks, do not transform their
business by introducing IT, their survival will become difficult, as now-a-days IT is
not a ma\
tter of convenience but a survival factor. Therefore, e – banking services are a potent
factor for transformation in this e – age.
References:
Sourkouhi(2012),A General View on the E-banking ,Dept. accounting,

Islamic Azad University, Roudsar and Amlash Branch, Roudsar, Iran.
Reviewed at 01.01.15,9.00 am.
Chapter 3
Overall conceptual review of e-banking
3.1Electronic Banking:
Electronic Banking or e-banking may be defined as the banking environment in which

banking information as well as transactions moves and conducted through electronic
medium. It 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, transact business, or obtain information on financial
products and services through a public or private network, including the Internet. It
includes any technology that that enables a bank to do business electronically. E-
banking has different aspects like Internet banking, Online Banking and e-payments.
E-banking may be understood as term that covers all these ways of banking business
electronically. The following illustration depicts the different form of e-banking
services:
So E-banking is conduct of banking services by using electronic delivery channels
such as ATM, telebanking 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.
E-Banking is an umbrella term for the process by which a customer may perform
banking transactions electronically without visiting a brick-and-mortar institution.
The following terms refers to one form of electronic banking: personal computer (PC)
banking, Internet banking, virtual banking, online banking, home banking, remote
electronic banking, and phone banking. PC banking and Internet or online banking is
the most frequently used designations. It should be noted, however, that the terms
used to describe the various types of electronic banking are often used
interchangeably.
3.2 : Types of E-banking:
3.2.1 PC Banking:
The increasing awareness of the importance of literacy of computer has resulted in
increasing use of personal computers through the entire world. Furthermore,
incredible plummet of cost of microprocessor has accelerated the use of computer.
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 by
subscribing to and dialing into the banks‟ Intranet proprietary software system using
password.
3.2.2 Internet Banking:

Customers need an Internet access service to handle this type of banking. As an
Internet Banking customer, he/she will be given a specific user ID and a
confidential/secret or secured password so that they can access to their own account.
Here customer can able to see the ledger balances, transfer his money, request
something towards bank, etc.
3.2.3 Virtual Banking:

Virtual banks are banks without bricks; from the customer perspective, they exist
entirely on the Internet, where they offer the same range of services and adhere to
same rules and regulations of central banks.
3.2.4 Telephone Banking:

Telephone banking refers to the services provided through phone that requires the
customers to dial a particular telephone number to have access to an account which
provides several options of services. Despite huge potential, telephone banking
services have not been widened enough in daily banking activities in Bangladesh.
Only four banks so far provide a few options of telephone banking services such as
detail account information, balance inquiry, information about products or services,
ATM card activation, cheque book related service, bills payment, credit card service
and so on. Funds transfer between current, savings and credit card account, stock
exchange transactions etc are still inaccessible through telephone banking in
Bangladesh.
3.2.5 Mobile banking:
Mobile banking (also known as M-banking or SMS banking) is a term used for
performing balance checks, account transactions, payments etc. via a mobile device
such as a mobile phone. Mobile banking is most often performed via SMS or the
Mobile Internet but can also use special programs called clients downloaded to the
mobile device. The standard package of activities that mobile banking covers are:
mini-statements and checking of account history; alerts on account activity or passing
of set thresholds; monitoring of term deposits; access to loan statements; access to
card statements; mutual funds/equity statements; insurance policy management;
pension plan management; status on cheque, stop payment on cheque; ordering check
books; balance checking in the account; recent transactions; due date of payment
(functionality for stop, change and deleting of payments); PIN provision, change of
PIN and reminder over the internet; blocking of (lost/stolen) cards; domestic and
international fund transfers; micro-payment handling; mobile recharging; commercial
payment processing; bill payment processing; peer to peer payments; withdrawal at
banking agent;3 and deposit at banking agent. Despite huge prospects, only a few
banks adopted mobile banking in Bangladesh during the last year.
3.2.6 Online Banking:

On line banking is a service provided by many banks, and Financial Institutions that
allows one to conduct banking transactions over the Internet using a personal
computer, mobile telephone, or handheld computer (such as a "personal digital
assistant"). Through on line banking one may be able to:
 Access accounts round-the-clock, even on weekends
 See balances on line and find out whether checks or deposits have cleared
 Transfer funds between accounts
 Receive and pay bills on line(without check writing, envelopes, or stamps)
3.2.6.1 Common Online Banking Services includes-

The following table lists some of the common retail on line banking services offered
by banks are as follows:
 Account management
 Bill payment and presentment
 New account opening
 Investment/Brokerage services
 Loan application and approval
 Business-to-business payments
 Business-to-business payments
3.3. Required Physical Infrastructure for E-Banking:
3.3.1 Internet:
The Internet is a global system of interconnected computer networks that use the
standard Internet Protocol Suite (TCP/IP) to serve billions of users worldwide. It is a
network of networks that consists of millions of private, public, academic, business,
and government networks of local to global scope that are linked by a broad array of
electronic and optical networking technologies. The Internet carries a vast array of
information resources and services, most notably the inter-linked hypertext documents
of the World Wide Web (WWW) and the infrastructure to support electronic mail.
3.3.2 Intranet:
An intranet is a private computer network that uses Internet Protocol technologies to

securely share any part of an organization's information or network operating system
within that organization. The term is used in contrast to internet, a network between
organizations, and instead refers to a network within an organization. Sometimes the
term refers only to the organization's internal website, but may be a more extensive
part of the organization's information technology infrastructure. It may host multiple
private websites and constitute an important component and focal point of internal
communication and collaboration.
3.3.3 Hardware:
The essential hardware required to build a complete online banking system includes:
 Personal Computers,
 Servers,
 Routers,
 Firewalls
 Modems
 POS (Point of Sale) Terminals
 ATM (Automated Teller Machines) booths
3.3.4 Software:
For conducting online banking operations several software are now available such as
FLEXCUBE, a banking software which enables banks to process and store banking
transaction data and making payments through a dedicated client-server network.
Another type of statistical software E Views (Econometric Views) is a statistical
package for Windows, used mainly for time-series oriented econometric analysis.
Different banks use different types of software depending on the cost and other
factors.
3.3.5 Electronic Money (E-Money):

Electronic money (also known as e-currency, e-money, electronic cash, electronic
currency, digital money, digital cash or digital currency) refers to money or scrip
which is only exchanged electronically. Typically, this involves the use of computer
networks, the internet and digital stored value systems. Electronic Funds Transfer
(EFT) and direct deposit are all examples of electronic money. Also, it is a collective
term for financial cryptography and technologies enabling it.
3.3.6 Plastic Money:

Plastic money is a plastic card issued by banks or financial institutions with a
magnetic stripe or chip that holds machine readable identification code (account
number, customer‟s personal identification number, and other such information
readable by ATMs). Bank cards are used for electronic commerce (with magnetic
stripe readers or via Internet) and for banking transactions through Automated Teller
Machines (ATMs). Types of plastic money include:
3.3.7 Credit Cards:

Credit Card can be called as an equivalent of a loan sanctioned by the bank to its
customers. Credit card facilitates and makes it possible to ―Use First and Pay Later‖
the specified amount of credit as per the agreed terms of sanction. This card facilitates
the cardholder to purchase goods and services from the merchant establishments and
shops through the collaborating credit card companies like VISA, MasterCard,
Maestro, and Cirrus.
3.3.8 Debit Cards:

A Debit Card provides for online electronic payment like Credit Card but from
savings or current accounts of the cardholder for purchases. This card is a deposit
access product where cardholder uses his own money in his bank account through the
debit card on the principle of ―Pay First and Use Later‖. Debit card contains
the symbol or hologram of collaborating company such as VISA, MasterCard,
Maestro and Cirrus etc.
3.3.9 ATM Cards:

ATM Card can be used to withdraw money, deposit money, balance enquires, deposit
bills in the account. The cardholder must maintain a savings bank account or current
account with the bank. On issuance of card, the cardholder is intimated a four digit
secret Personal Identification Number (PIN). The cardholder is always required to
maintain safely the PIN to prevent fraudulent activity.
3.3.10 ATM Card-cum-Debit Card:

ATM Card-cum-Debit Card can be used both as an ATM card and Debit card as a
method of payment when purchasing goods and services in Bangladesh and Overseas.
The cardholder is responsible for all transaction made by the use of the card. In
Bangladesh most of the debit cards issued by banks are also ATM cards. For example,
Dhaka Bank Limited, DBBL, SCB, HSBC, BRAC Bank and other banks operating in
Bangladesh provides ATM Card-cum-Debit Card.
3.3.11 Smart Card:

The smart card is an amazing piece of technology. It is the size of a regular ATM
card but is capable of storing over a 1000 times more data. The data can be encrypted
and hence the card is completely temper-proof. The card can also be personalized to
the holder by printing personal and other details on the card face.
3.3.12 Point of Sales:
Point of sale (POS) or checkout is the location where a transaction occurs. A
"checkout" refers to a POS terminal or more generally to the hardware and software
used for checkouts, the equivalent of an electronic cash register. A POS terminal
manages the selling process by a salesperson accessible interface. The same system
allows the creation and printing of the voucher.
3.3.13 Electronic Funds Transfer:

Electronic funds transfer or EFT refers to the computer-based systems used to
perform financial transactions electronically. An EFT is the electronic exchange or
transfer of money from one account to another, either within the same financial
institution or across multiple institutions.
3.3.14 Electronic Payment System:

Electronic payment is an integral part of electronic commerce. Broadly de-fined,
electronic payment is a financial exchange that takes place online between buyers and
sellers. The content of this exchange is usually some form of digital financial
instrument (such as encrypted credit card numbers, electronic checks, or digital cash)
that is backed by a bank or an intermediary, or by legal tender.
3.3.15 Mobile banking

Mobile banking was a term used for performing balance checks, account transactions,
payments etc. via a mobile device such as a mobile phone. The standard package of
activated that mobile banking covers are: mini-statements and checking of account
history; alerts on account activity or passing of set thresholds; monitoring of term
deposits; access to loan statements; access to card statements; mutual funds/equity
statements; insurance policy management; pension plan management; status on
cheque, stop payment on cheque; ordering check books; balance checking in the
account; recent transactions; due date of payment; PIN provision, change of PIN and
reminder over the internet; blocking of (lost/stolen) cards; domestic and international
fund transfers; micro-payment handling; mobile recharging; commercial payment
processing; bill payment processing; peer to peer payments; withdrawal at banking
agent; and deposit at banking agent. Despite huge prospects, only a few banks
adopted mobile banking in Bangladesh during the last year.
3.3.16 Tele-banking
Tele-banking service was provided by phone. To access an account it was required to
dial particular telephone number and there were several options of services. Tele
banking services widened not enough in daily banking activities in Bangladesh. Only
four banks so far provided a few options of tele banking services such as detail
account information, balance inquiry, information about products or services, ATM
card activation, cheque book related service, bills payment, credit card service and so
on. Funds transfer between current, savings and credit card account, stock exchange
transactions etc
Referances:
1.Md. Mohiuddin IOSR Journal of Business and Management (IOSR-JBM) e-
ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 16, Issue 5. Ver. II (May. 2014),
PP
16-24 www.iosrjournals.org
2.Dr. Md. Habibur Rahman1, Dr. Mohammed Nasir Uddin2 and Sayeed
Ahmed Siddiqui, Problems and Prospects of E-Banking in Bangladesh,
International Journal of Scientific and Research Publications, Volume 2, Issue
7, July 2012 1
ISSN 2250-3153
CHAPTER FOUR
FINDINGS & ANALYSIS OF THE STUDY
4.1 : Present Scenario & Status of E- Banking in Bangladesh:
At present, several private commercial banks (PCBs) and foreign commercial banks
(FCBs) in Bangladesh offer limited services of telephone banking, internet banking,
and E-banking facilities working within the branches of individual bank in a closed
network environment. 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.
But in Bangladesh total number of different categories of banks, is currently fifty-
seven. The Bangladesh Development Bank Ltd (BDBL) began operations, on 3rd
January, 2010 through merger of Bangladesh Shilpa Bank and Bangladesh
Shilpa Rin Sangstha. From the field survey we observe that following banking
services are being provided by different banks: Core Banking, Cluster Banking,
Phone Banking, SMS Banking, Internet Banking, Various Cards, ATM Shared
(VISA/MASTER), ATM own (VISA/MASTER), EFT, SWIFT, PC Banking, POS
Terminal, Banking KIOSK, Offline Branch Computerization.
Electronic banking is relatively new concept in Bangladesh. Formerly only the foreign
banks operating in Bangladesh like Standard Chartered Bank, HSBC, etc provided it.
These foreign banks managed to gain competitive advantage with the introduction of
electronic banking for the first time in Bangladesh. As result the local commercial
banks started to loose their market to these foreign commercial banks. So they reacted
very quickly. First time it was combined, now some of the banks are offering
Electronic-banking services even solely. Eastern Bank Ltd. is the leading local
commercial banks in Bangladesh to offer world-class electronic banking services. In
terms of adoption of E-Banking we can divide our banking sector in to three basic
categories
1. Classical Banks.
2. Modern Banks.
3. Electronic Banks.
4.1.1 : Classical Banks:
Classical bank includes those commercial banks, which don‘t provide or provide
very little E-banking facilities. In our country these category mainly includes
mainly.
• Nationalized Commercial banks
1. Sonali Bank
2. Janata Bank
3. Agrani bank
4. Rupali Bank
• Specialized banks
1. Bangladesh Shilpa Bank (BSB)
2. Rajshai Krishi Unnayan Bank
3. Bank of Small Industries and Commerce Bangladesh Ltd.
4. Bangladesh Shilpa Rin Sangstha (BSRS)
5. Bangladesh Krishi Bank (BKB)
• Local private commercial banks-

1. The Oriental bank ltd.
2. First security bank ltd.
3. Social investment bank ltd.
4. Al Arafah bank
5. The Standard Bank Ltd.
6. Bangladesh Commerce Bank Ltd.etc
These banks are termed as classical because this Bangladeshi banks still now mainly
follows the manual procedure for securing the valuable information and assets of
customers. Except Agrani bank and Janata bank these banks are still in infant level
automation. Both of these two banks has launched ATM card sharing with other
banks and EFTS like Ready cash, Q-Cash other than these two facilities, these banks
has no other E-Banking facilities like Online banking, Home banking, Internet
Banking. All the NCBs in Bangladesh use the software named as Bexibank. Besides
this they also use two most widely used software named PC bank and NIKASH
developed by the Bangladesh Bank.
These classical banks have no centralized database system. As a result they always
lack the required effective coordination among different units, required information to
make right decision at right time, incurs high overhead costs. The branches of these
classical banks are not connected through LAN or WAN or MAN. The proper
coordination and harmonization between branches and head office of these banks are
very much weak. They cannot take proper decision at proper time and manage their
loans and deposit portfolio achieved client satisfaction. Services provided by these
banks in the classical stage are outdated and lacks the competitiveness.
But it is a matter of hope that the top management of these commercial banks is
seriously thinking about full automation of their operations both at the branch level
and at the head office level. But to do this they face some common problems like –
 Huge Number of branches all over the Bangladesh even outside the
country and for the purpose of automation huge investment is necessary.
 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.
In spite of these shortcomings all these banks in the classical stage are trying to
convert themselves into the modern electronic banks and make them able to
compete with other commercial banks
4.1.2 : Modern Banks:

Currently some of the banks of Bangladesh are providing electronic 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 (LC) and foreign exchange etc. In case
of inter-bank transactions, central bank authority handles the procedure all the
banks are termed as modern banks this is the largest segment of commercial banks
among the three. These commercial banks which are much more innovative,
flexible, and proactive in their operation. They are quite at home in managing their
assets and liabilities. Banks as well as employees are beneficiated after
implementing Information technology in Bank because this system has some
advantages over traditional system. Advantages are as follows:
 Process handling becomes faster. It includes day end process, month end
process, monthly/yearly interest calculation; fixed deposit receipt process,
scheme process and loan process etc.
 In traditional system, to accomplish audit, government officials need to
go to every bank. After IT implementation they do not need to go to
banks rather they can collect the same information through network and
audit report can be generated within few minutes.
 In traditional system it is time dependent to transfer money from city to
remote area and also a matter of some investment. During the transfer
time the money is idle so it‘s a great loss for the bank as well as
customers. Electronic system can be used to transfer money within a few
seconds (Intra-bank).
All these modern banks have somewhat common features like-
 Trying to launch or at least have planned to initiate online banking
Tele banking etc in near future.
 Trying to follow marketing strategies of others.
 Providing ATM card and in some cases credit card facilities.
 Initiating modern banking concepts like one-stop services, serving the
underserved market, and continuously updating their service and
product portfolio.
 Providing quick transfer of remittances with the help of international
money transfer unions like Western Union, Express Money and Money
Gram.
Following are some of those commercial banks, which fall with in modern banks
category in our country, which provide ATM services on shared basis and planning to
provide online banking and any branch banking.
 Pubali Bank Ltd.
 Mercantile Bank Ltd.
 National Bank of Pakistan
 National Bank Ltd.
 International Finance Investment and Commerce bank Ltd
 United Commercial Bank Ltd.
 Uttara Bank Ltd.
 National Credit and Commerce Bank Ltd.
 Prime Bank Ltd.
 The Mutual Trust Bank Ltd.
 State Bank of India
 Habib Bank Ltd
 Arab Bangladesh Bank Ltd.
 Southeast Bank Ltd.
4.1.3 : Electronic Banks:

Electronic banking as a segment of electronic business, which, in turn, encompasses
all types of business performed through electronic networks. Banks in this category
are more electronically service oriented than the above-mentioned commercial
banks. Electronic bank include those commercial banks, which uses sophisticated
computer and networking technology to carryon their day-to-day banking business.
All of their business process in maintained and executed electronically. Following
are those banks, which fall in the class of Electronic Banks
Two fundamental aspects of electronic banking are the nature of the delivery
channel through which activities are performed, and the means for customers to
gain access to those channels. Commonly delivery channels include ‗closed‘ and
‗open‘ networks. ‗Closed networks‘ have no such membership requirements.
Currently, widely used access devices through which e-banking products and
services can be provided to customers include point of sale terminals, automatic
teller machines, telephones, PCs.
Here we divide the electronic banks in to two categories.
a. Local Electronic Commercial banks:

1. Eastern Bank Ltd.
2. BRAC Bank Ltd.
3. Bank Asia ltd
4. Dutch Bangla Bank Ltd
5. Jamuna Bank
6. Islami Bank Bangladesh Ltd.
b. Foreign Electronic Commercial banks:

1. Standard Chartered Bank ltd. (SCB)
2. HSBC
3. Citi bank NA
4. Commercial Bank of Ceylon Ltd.
5. Woori Bank
6. Bank Alfalah etc.
4.1.3.1 : Features of the Electronic Bank:

With business processes becoming increasingly digitized, business models, and,
with them, the risk structure of credit institutions, are changing. The following
characteristics of E-banking are therefore at the center of banking supervisors
‘interest.
 Overcomes national borders:

Owing to the virtual nature of electronic commerce, the transaction of
banking business is no longer confined to national borders. Much the
same applies to the relationship between bank products and non-bank
products. That means supervisors will need to cooperate even more
closely with foreign supervisory authorities than in the past.
 Depends on IT:
The secure and efficient deployment of ICT will become a crucial
strategic factor in the success of electronic banking. Every stage in the
value-added chain, from development through production to the
marketing of financial products, is dependent on IT. Most importantly,
this dependency, coupled with the innovative momentum of the Internet,
will increase the strategic and operational risk faced by banks.
 Card services:
With I-Banking one can view complete Credit Card details. One can view
Credit Card statement, determine the minimum amount due, request for a
credit limit increase and even make an online card payment.
 Enhances competition:
Several factors have conspired to induce this effect. The greater ease with
which prices and products can be compared has enhanced market
transparency; the market entry barriers for new competitors have been
lowered; the spatial and temporal constraints on competition have been
removed; Internet or online banking customers display little brand
loyalty; and e-banking customers are focusing ever more on costs and
profit margins.
Table 1: Various E-Banking services introducer bank and introducing date:

E-Banking Services Introducer Bank Date
Mobile Banking Dutch Bangla Bank 31 March 2011
ATM Cards Standard Chartered 2002
Bank
Telephone banking Standard Chartered 1997
Bank
Smart Cards Standard Chartered 1997
Bank
PC banking Standard Chartered 1997
Bank
Source: Data are collected through internet.
4.1.3.4 : E-Banking services in Bangladesh
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.
Establishing E-banking infrastructure has been a challenging task for the developing
countries like Bangladesh. At present, there is no infrastructure for performing
Electronic-banking activities in Bangladesh. Nowadays, in fact, banks are involved in
e-business in a variety of ways, including cooperation with Internet service providers
(ISP‘s), the issuing of e-money or the execution of payments.
But in general we can define Electronic Banking according to the service provided-
 Automatic deposit and withdrawal of money
 Quick transfers of funds from one account to other, even to another bank
 Payment of utility bills, salary, opening of LC, being in the home or
the office.
 Balance enquiry, receipt of transaction statement
 Instructing the broker.
 Disabling the lost debit card or credit card, checking accounts
 Apply and issuance for new debit / credit card or checkbooks.
4.1.3.5 : Different forms of Electronic-Banking
The terms ‗PC banking‘, ‗online banking‘, ‗Internet banking‘, ‗Telephone banking‘
or‘ mobile banking‘ refer to a number of ways in which customers can access their
banks without having to be physically present at the bank branch. E-banking may be
understood as term that covers all these ways of banking business electronically.
 PC banking:
The increasing awareness of the importance of literacy of computer has
resulted in increasing use of personal computers through the entire world.
Furthermore, incredible Plummet of cost of microprocessor has accelerated the
use of computer. 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 by subscribing to and dialing into the banks‘
Intranet proprietary software system using password. Basically, there are two
types of PC banking.
(a) E-banking:
At present, 29 scheduled banks offer any branch banking facilities through
their respective bank online network that provides facilities like
transaction through any branch under the respective bank online network;
payment against pay order or pay order encashment, demand draft
encashment, opening or redemption of FDR from any branch of the same
bank; remote fund transfer, cash withdrawal, cash deposit, account
statement, clearing and balance enquiry within branches of the same bank;
and L/C opening, loan repayment facility to and from any branch of
respective bank under its own online network.
(b)Internet banking:
German banks have been offering the Internet banking since the mid-
nineties, although the only product they were offering at the time was
information. Only 7 out of 48 banks are providing some banking services
via internet that include account balance enquiry, fund transfer among
accounts of the same customer, opening or modifying term deposit
account, cheque book or pay order request, exchange rate or interest rate
enquiry, bills payment, account summary, account details, account
activity, standing instructions, loan repayment, loan information,
statement request, cheque status enquiry, stop payment cheque, refill
prepaid card, password change, L/C JIBC August 2010, Vol. 15, No.2
application, bank guarantee application, lost card (debit/credit) reporting,
pay credit card dues, view credit card statement, or check balance.
 Mobile banking:
The standard package of activities that mobile banking covers are: mini-
statements and checking of account history; alerts on account activity or
passing of set thresholds; monitoring of term deposits; access to loan
statements; access to card statements; mutual funds/equity statements;
insurance policy management; pension plan management; status on cheque,
stop payment on cheque; ordering check books; balance checking in the
account; recent transactions; due date of payment; PIN provision, change of
PIN and reminder over the internet; blocking of (lost/stolen) cards; domestic
and international fund transfers; micro-payment handling; mobile recharging;
commercial payment processing; bill payment processing; peer to peer
payments; withdrawal at banking agent; and deposit at banking agent. Despite
huge prospects, only a few banks adopted mobile banking in Bangladesh
during the last year.
 Telephone banking:
Tele banking service is provided by phone. Only four banks so far provide a
few options of tele banking services such as detail account information,
balance inquiry, information about products or services, ATM card activation,
cheque book related service, bills payment, credit card service and so on.
Funds transfer between current, savings and credit card account, stock
exchange transactions etc are still inaccessible through tele banking in
Bangladesh. That services Tele-banking provide mainly:-
Checking account balance, Funds transfer between current, savings and credit
card accounts, Bill payments, Stock exchange transaction, Receive statement
via fax, Loan payment information
 Magstripe(ATM) Cards:
Debit cards, often based around magnetic stripe technology, allow customers
online access to their accounts through a network of POS devices and ATMs.
The principle advantages quoted by proponents of Magstripe cards are low
price and the requirement that transactions are performed online. The
requirement for online transactions means that geographic outreach is
determined, in part, by the availability of reliable and affordable
communications and power.
 CDM:
CDM means ―Cash deposit machine‖. In Bangladesh it‘s mainly used
to deposit cash. Customers do not need any manual system to deposit cash in
his/her account. Banks are provide CDM card to their customers and
customers are can easily deposit their money into their account in 24 hours in
a day.
 Smart Cards:
Smart cards have a machine-readable chip embedded in the card. This chip is
able to store detailed transaction records offline and perform transactions
without a link to the customers ‗account. In order to do this, value is stored on
the chip by the customer and is periodically reloaded, over the counter,
through ATM machines or through POS devices.
The principle advantages quoted by proponents of the Smart Card are security
and offline functionality. Biometric security allows a cardholder‘s picture and
fingerprints to be stored on the card and used to identify the user. More
information on biometric security is available in Stephen Whelan‘s article in
the CGAP innovations series. Disadvantages include the cost of the card and
risk of loss of value on losing the card. Counterweighted by move to pre-
authorized debit where cards are loaded ‗on-line‘ but transact ‗off-line‘ which
allows reconciliation of approved transactions.
Euro card, MasterCard and Visa are currently introducing a new standard
(called EMV) whereby all Visa, MasterCard and Euro card branded cards will
be issued with a magstripe and a smart chip. Whilst this offers security
advantages, it could significantly increase the cost of any mass market solution
which relies upon the Visa or MasterCard distribution network.
 Electronic fund transfer services:
IFIC bank ltd. Mercantile bank ltd. Pubali bank ltd. AB bank ltd Agrani
bank is providing electronic fund transfer services on shared basis in the
name of Q-cash.
 CIB Report Generation:
Bangladesh Bank has the access to all other banks so it is very easy task
to maintain an integrated database of all customers specifying their credit
and debit information with each bank
 Any branch Banking:

At present Mutual Trust bank ltd. State Bank of India, Habib Bank Ltd.
National Bank of Pakistan are offering any branch banking to all their
clients. Mercantile Bank Ltd. IFIC bank ltd. NCC bank ltd. Offer any
branch banking services to only a selected group of clients who are ready
to pay an amount of extra annual fee for the usage of these service.
National Bank ltd. United Commercial bank ltd. Southeast bank ltd.
Prime bank ltd. are hoping and arranging to provide any branch banking
services.
 Software used:
All the modern banks uses two common software developed by
Bangladesh bank named NIKASH for check clearing purposes and PC
bank for maintaining the ledger of clients. Besides Dhaka Bank ltd. and
Eastern bank ltd. uses FLEXCUBE, Mercantile bank ltd. and Mutual
Trust Bank ltd. uses FLORA Bank, the City bank ltd. and Arab
Bangladesh Bank ltd. uses FINACLE.
Table : Common Features Offered by Electronic Banking Products:

Accessibility
ATM Withdrawals and deposits, account transfers,
money transfers, purchase of airtime and bill
payments.
Merchant network Ability to use solution to make purchases at
merchants
Visa/Maestro issuing Cards branded Visa or Maestro (or
MasterCard) enabling the cards to be used
throughout the Visa or MasterCard
infrastructure.
Cash back The ability to withdraw cash from the card
through a merchant network
Person to person The ability to transfer funds onto the card
transfer
Third Party Deposits The ability to deposit money into the card
through third parties e.g. Post Offices
Ease of Use / User Training
Uniformity of service Services are provided in a standardized manner
regardless of point of service
Assistance at service Assistance can be provided by the merchant or
points through assisted service points
Transparency
Statement Printing A statement showing recent history on the
electronic account is printed on request
Balance Enquiry A balance enquiry either prints the account
balance or shows it on a screen
Transaction Receipt A receipt is printed by the ATM or POS device
following the completion of the transaction
Security
PIN based verification Verification of the user through use of a secret
numerical code called a Personal Identification
Number.
Biometrics Using finger print or iris scans to verify the
identity of the user
Photograph A photograph of the user is often printed on the
face of the card
Value Added Services
Money transfer Transferring money typically from one card
holder to another
Bill payments Paying bills electronically usually for utility
payments
Call centre A call centre provides a mechanism to initiate
transactions such as direct debits and enables
lost cards and problems to be reported and
resolved.
Electronic Funds Electronic funds transfer allows electronic
Transfer payments into an e-banking account
(EFT)
Source: Data was collected from secondary sources.
4.2 : Prospects of E-Banking 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 Bangladesh 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. Digital telephone exchanges have been
established in 389 upazilas and 17 growth centers. Work is underway to cover the rest
of the upazilas under digital exchange system. Meanwhile, Bangladesh has joined the
information super-highway by connecting itself with international submarine cable
system in 2006. A total of 159 Internet Service Providers (ISPs) have now been
connected with this system of which 64 are actively providing services. Internet
connection is slow with bandwidth range 32 kbps to 56 kbps for dial up and 64 kbps
to 8 mbps for broadband. Under this scenario, as a part of government decision of
building digital Bangladesh, the existing capabilities of ICT sector is likely to
increase rapidly in bringing all upazilas under internet services and this will
contribute in widening the scope of e-banking throughout the country. The overall
computer density in the banking sector is 1.64. For foreign commercial banks (FCBs)
the computer density is 45.34, where as for NCBs the ratio is only 0.41. The
specialized bank scenario is almost same as the NCBs, 0.43. On the other hand,
private commercial banks have comparatively higher ratio, 4.94. As a whole 81.81
JIBC August 2019, Vol. 15, No.2 percent bank does not have any local area network
(LAN), 30 percent have WAN (Wide Area Network) but for some banks many
branches are outside of WAN connectivity. At present, all foreign banks of our
country are using E-banking system; they are invested a lot for their automation
banking services. They are the pioneer of implementing electronic banking systems in
Bangladesh, but now most of the private banks of our country are using electronic
banking systems. In our country different banks are offering electronic banking
services in different ways, some are offering ATM (Automatic Teller Machine)
services, some are tele-banking and some are electronic fund transfer, debit card,
credit card etc. Recently, the government‘s 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 e-
banking in Bangladesh.
4.2.1 : Economic Aspects of E- Banking in Bangladesh:
Advantages of e-banking in Bangladesh:
Employment Opportunity:
There are a substantial number of educated unemployed youth forces, with
ability to read and write English exist in the country. They can be trained
within a required skill in a short time.
Short term Benefits:

Reduce extra time; Increase productivity and efficiency; Eliminate duplication
and wastage; Cut down maintenance, and shortage cost; Curtail security cost.
Long-term benefits:
Create new opportunities of jobs for jobless; Participate in the country‘s
economic health; proper planning and monitoring; Proper use resources.
Job creation:
According to Bangladesh Bureau of Statistics, the number of unemployed
people in Bangladesh in 1990-01 was 1.0 million. Among them 0.2 million are
male and 0.8 million female, at the rate of unemployment is 1.1 which is
extended 1.9. The issue of computers eliminating jobs of people is quite
emotional and painfully real. But it has two sides that automation will
eliminate certain types of job like record keeper and also create jobs like
administrator, system analyst, programmer, operator etc. and help to reduce
unemployment problem.
Contribution to GDP:
Banks with a national economy, work towards building national capital,
increasing national savings and mobilizing investments in trade and industry.
Benefits from the banks’ point of view:
From the banks‘ view point, the first benefits for the banks offering e-banking
services is better branding and better responsiveness to the market. The other
benefits are possible to measure in monetary terms. The main goal of every
company is to maximize profits for its owners and banks are not any
exception. Automated e-banking services offer a perfect opportunity for
maximizing profits.
Benefits from the customers’ point of view:
The main benefit from the bank customers‘ point of view is significant saving
of time by the automation of banking services processing and introduction of
an easy maintenance tools for managing customer‘s money. The main benefits
of e-banking are as follows: Increased comfort and timesaving-transactions
can be made 24 hours a day, without requiring the physical interaction with
the bank. Quick and continuous access to information. Corporations will have
easier access to information as, they can check on multiple accounts at the
click of a button. Better cash management. E-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 seek slightly different kind of benefits from e-banking. Reduced
costs: This is in terms of the cost of availing and using the various banking
products and services. Convenience: All the banking transactions can be
performed from the comfort of the home or office or from the place a
customer wants to Speed. The response of the medium is very fast; therefore
customers can actually wait till the last minute before concluding a fund
transfer Fund‘s management. Customers can download their history of
different accounts and do a ―what-if‖ analysis on their own PC
before affecting any transaction on the web.
Economical benefits:
E-banking serves so many benefits not only to the bank itself, but also to the
society as a whole. E-banking makes finance economically possible: (i) Lower
operational costs of banks (ii) Automated process (iii) Accelerated credit
decisions (iv) Lowered minimum loan size to be profitable. Potentially lower
margins: (i) Lower cost of entry (ii) Expanded financing reach (iii) Increased
transparency. Expand reach through self-service: (i) Lower transaction cost
(ii) Make some corporate services economically feasible for society (iii) Make
anytime access to accounts and loan information possible.
Policy Implications:
The comprehensive set of e-banking products can help us run our business
more effectively by automating many of our critical banking activities and
interacting electronically with our bank. Initial cost of e-banking may be high,
but it can be recovered within a few years. Electronic banking may play a vital
role in order to promote an automated service to the potential customers.
Ministry of finance can also play some role for conveyance. Arrange monthly
seminar in the banks or in the training academy of the banks to make
awareness about the new technology available in banks. Electronic security
and viability may require taking faith from the potential clients.
Communication should be liberalized for technological advancement. Bank
should develop own online software rather depending on other vendors.
4.3. Constraints to E-Banking in Bangladesh

Foreign and private banks offered a broad range of services over the internet. Public
sector banks lag behind in offering wider range of internet banking services and products.
 At present, there is no proper infrastructure for performing Electronic
banking activities in Bangladesh.
 Slow uptake of internet access and PCs
 Poor telecommunication network policies and slow paced regulatory initiatives.
 Very minimum number of users of internet.
 The banking infrastructure in terms of electronic payments and inter-bank
connectivity is poor.
 Limitations of supportive legal system.
 Absence of cyber law.
 Absence of EFT (Electronic Fund Transfer) legislation.
 Absence of need based business plan for online banking
 ATMs may have network problems, unavailability and shortage of money.
 High price of computer, computer hardware and banking software.
 Lack of awareness at government level of e banking issue.
 Lack of awareness at customer level of e banking issue.
 Weather has a direct effect towards e-banking. If create heavy rain, flood
or cyclone then the entire network is down.

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Thesis Paper

Course Code: FIN 5207

This Thesis Report is submitted as a part of completing Master of

Khairul Kabir Sumon

Date of Submission: ……..

Subject: Submission of Thesis paper

It is a great pleasure for me to submit my Thesis Report on " E-banking: Present

Scenario and Future Prospects in Bangladesh which is essential part of the

Md. Shekh Farid Islam

Md. Shekh Farid Islam

Future Prospects in Bangladesh” has been prepared by Md. Shekh Farid

I wish his success at every sphere of life.

At last, I am also express my hearted thanks to my friends specially who have

Chapter two: Literature Review 10-22

Chapter three: Overall Conceptual Review of E-Banking 23-30

Chapter Four: Findings & Analysis of the Study 31-48

In Bangladesh research has been done on electronic commerce issues, computer

1.1. Concept of Banking:

 Agency and Utility Services :

1.2 : Concept of E-banking:

E-Banking information architecture is modeled as client-server architecture. A client

1.3 : Scope of E- Banking:

1.4 : Benefits of E- Banking:

 Paper Work Reduced:

 Utility Bills Payment:

1.5 : Origin of the Study:

E-banking is the waves of the future. It provides enormous benefits to consumers in

1.6. Objectives of the study:

There are several other objectives to conduct the study.

2.1: Banking Sector and The Adaptation OF E-Banking:

3.Sathye M (1999), “Adoption of internet banking by Australian consumers: an

6.Barbara A. Good, “E-Money” Working Paper , Federal Reserve Bank of

7.Bauer, Paul W., “Making payments in Cyberspace”, Economic Complementary,

9.Denny S., “Electronic Commerce Challenge”, Journal of Internet Banking and

11.Khan, A.R,(2007) “Bank Management” 4th ed. Ruby Publications, pp-312-347

Automated teller machine:

An automated teller machine (ATM) is a computerized telecommunication device that

It is an electronic network for financial transaction. ACH process large volume of

Security measures of e-banking:

Corporate automated clearing house:

The automated clearing house (ACH) is an electronic network for financial

Other E-banking services available in Bangladesh:

2.6.Role of E-Banking in the Banking Sector:

Sourkouhi(2012),A General View on the E-banking ,Dept. accounting,

Electronic Banking or e-banking may be defined as the banking environment in which

3.2.2 Internet Banking:

3.2.3 Virtual Banking:

3.2.4 Telephone Banking:

3.2.6 Online Banking:

3.2.6.1 Common Online Banking Services includes-

3.3. Required Physical Infrastructure for E-Banking:

An intranet is a private computer network that uses Internet Protocol technologies to

3.3.5 Electronic Money (E-Money):

3.3.6 Plastic Money:

3.3.7 Credit Cards:

3.3.8 Debit Cards:

3.3.9 ATM Cards:

3.3.10 ATM Card-cum-Debit Card:

3.3.11 Smart Card:

3.3.13 Electronic Funds Transfer:

3.3.14 Electronic Payment System:

3.3.15 Mobile banking