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. E-banking is a form of banking where funds are transferred through an exchange of electronic signal between financial institution, rather than exchange of cash, cheeks or other negotiable instruments.
The banking industry as a whole, except for the four specialized banks (SBs) rushed to offer technology based baking services during the middle of the current decade. The existing form of e-banking that satisfies customer demand in banking activities electronically throughout the world are PC banking or PC home banking that include online banking, Internet banking, mobile banking and tele banking.
The existing modern and innovative technology driven products and services offered by the banking system in Bangladesh includes debit card, credit card, automated teller machine (ATM) cards such as Master Card, Visa Card, Q-cash Card, Point of sales (POS), on line service, tele banking, internet banking, society for worldwide inter bank financial telecommunication (SWIFT), and Reuter.
In most of the modern ATMs, the customer is identified by inserting a plastic card which is known as ATM card with a magnetic stripe or a plastics smart card with a chip, that contains a unique card number and some security information such as an expiration date etc. Authentication is provided by the customer entering a personal identification number (PIN).
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. Introduction:
There is no official definition of this term, but it generally implies a service that allows customers to use some form of computer to access account-specific information and possibly conduct transactions from a remote location – such as at home or at the workplace. Online or internet banking is the next stage in the development of banking services in Bangladesh. The banking system in the country was known for their stability and also stubbornness. The public banks in the country always resisted to any kind of change in their working styles through strikes and walk outs.
But after some vigorous training and negotiations the concept of online banking was bought into mainstream banking in Bangladesh. This was already popular in other more developed countries and with the opening up of the banking market to foreign players in Bangladesh it was begging to be implemented in our mainstream commercial banking systems. Internet banking has been so popular in the countries; it has been implemented in so far due to certain reasons. Online Banking makes the regular transactions for a client speedy and time efficient with little or no paperwork involved.
There is no need for standing in long ques any more for making a deposit or getting a withdrawal. Banking has turned into a 24/7 service with the bank always available to their client. This especially helps the various businessmen who need the best services at any time day or night. Online banking is the need of the new professional in this modern age who is always on the move and working and trying to succeed in a constantly changing and dynamic environment. There are advantages involved for the bank here as well.
Through online banking the bank can attract the more sophisticated clients whose needs can now be met through banking through the internet. Also this makes the banks competitive in the international market and against the best banks in the world. Online banking has positively affected the banks in increasing their customer diversity and improved the quality of clients as well. Objectives of the study: The major objectives of the study are to analyze the present status of e-banking, its various forms, their characteristics, benefits and constraints in Bangladesh.
Methodology of the study: The study is based on review of related studies done earlier and secondary information collected through library work. Justification of the study: E-Banking can conveniently manage all our banking needs 24 hours a day, 7 days a week with online banking. This Internet-based solution allows us to manage our company’s finances from any computer with internet access. Online banking application addresses the needs of small, individual and corporate account holders of the bank.
This application provides a comprehensive range of banking services that enable the customer to meet most of their banking requirements over the net. Many people find that internet banking is very convenient as the advantages far outweigh any disadvantages. There are many different positive aspects to banking online. One of them is that we can do our banking from home, without having to waste gas driving to the bank or waste time waiting in line. Most banks are eager to get us to try online banking. Check out our banking terms with regard to this option offered by most banks.
The history of banking online has always stressed convenience for the customer as well as security. Today, we can not only enjoy secure banking transactions online, but we can have our paycheck automatically deposited into our bank account and have it available that day, instead of waiting until the check clears. In addition to getting automatic deposits, online banking transactions also include automatic bill paying. Instead of having to write a check to pay our bills, we can have the bills that we pay each month automatically deducted from our banking account each month.
Internet banking is not just concentrated on our checking account. We can also use internet banking to get a loan. There are some online banks that will offer us every service that a land bank will offer only they exist only online. Our own bank also, most likely, encourages online banking and offers free features such as checking to savings account deposits, automatic bill paying, automatic deposit and home equity loans – all with the click of a mouse! Debt management is essential when structuring your finances. Internet banking is the way of the future.
Years ago, we had to go to the bank when they were open and wait in a long line to perform a transaction. Today, we can bank from our home without having to wait a second – and best of all, online banking is free. With the rapid development of internet, E-commerce and E-Banking are ready to play a significant function in the near future in Bangladesh. The innovative opportunities should be reachable by both large and small companies. But the right commercial and legal system is vital for the constructive augmentation of E-commerce in our country, which is the immaturity level.
To ensure optimistic impact of E-banking, information structure, cyber laws and skilled manpower along with environmental facilities are immediately needed. Now-a-days e-banking is a topic of paramount importance. Exploring the available literature it has been found that no in-depth work has been done on the topic till now. But there is a vital nexus between e- banking and economic development in the present era of globalization. So working on the topic is essential for the greater interest of people. In fact, the work has enormous justification from theoretical and practical view points.
Review of related literature: Mr. Mizanur Rahman finds that in Bangladesh, the expansion of e-banking is beset with several infrastructural, institutional, and regulatory constraints such as inadequate availability of reliable and secure telecommunication infrastructure, absence of a backbone network connecting the whole country, poor ICT penetration in the banking sector, lack of skilled manpower and training facilities, absence of supportive policies, guidelines, rules and regulations relating to e-transactions and the like. Despite the constraints, efforts by the Bangladesh Bank in modernizing the country’s payment system and commitment by the government in building Digital Bangladesh’ have brought competition among the scheduled banks to improve banking services and rapidly adopt e-banking on a wider scale.
This note provides a critical overview on development of e-banking in Bangladesh and future prospects for better understanding the issue that includes concept of e-banking, present status of scheduled banks in adopting e-banking services, and prospects of e-banking in Bangladesh on the basis of current trend in developing the ICT infrastructure in the country as well as ICT penetration in the banking sector that follows some policy suggestions for BB, Govt. f Bangladesh and scheduled banks so that optimum benefit through c-banking may be obtained.
A well functioning e-banking network dependant on availability of a backbone network is connecting the whole country reliable and secure information infrastructure including telecommunication infrastructure; ICT penetration in the banking sector; skilled operational personnel; and legal and regulatory framework. The government, Bangladesh Bank and scheduled banks are related to these issues. Therefore, both individual and joint efforts are needed to overcome the constraints in promoting e-banking in the country.
Syed Abdulla Al Mamun and Mst. Nusrat Sharmin had a study on Management Information Systems (MIS) of a Bank. They said that an effective management information system provides users with accurate, timely and relevant information to support organization functions, decision making, communication, coordination, control, analysis and visualization. Thus it provides tremendous economic values of the various industries, particularly banking industry. SCB is a multinational bank. It plays a crucial role in the banking industry in Bangladesh.
This paper is a modest attempt to find out the overall management and operational areas of SCB and the role of Management Information Systems (MIS) in its different functional areas. The study shows that SCB uses computer based MIS in every sphere of its management and operation. It continuously up-to-date its information systems installing real time technology to enhance its operational effectiveness as well as to meet the ever changing customer needs.
The modem computer based management information system of SCB significantly contributes to its tremendous business performance ensuring real time ommunication in every step of its operation. As a result, SCB, a successful multinational bank operating in Bangladesh, countries to find new and better ways to put technology to its operation and customers’ best use. Moreover, it manages the business risks associated with its technology and investment properly. So the findings of the study can be a good lesson for the local banks and other financial institutions to adopt and manage the modem computer based management information systems. Shihab Uddin Khan wrote an article on security aspects of E-banking: Biometric Technology.
He found that an appreciation of the factors that securities encompass is important to understand security for Electronic Banking and related applications. For example, take a simple illustration of Bank Vault, as most would consider a bank vault highly secure. It draws its security from number of factors. The vault is built of strong material and is located in a secure building that offers considerable physical security. Access to the vault is controlled by a sophisticated door and locking mechanism that would require special technical skills and expensive equipment and reasonable time to breach.
The physical and technical characteristics of the vault mean that it would take considerable time and resources to breach it. Since both building and vault are protected through automated alarms, attempting to breach the vault carries significant risk of being caught. The likelihood of an attempt on vault is very low. Further, any deposits held in the bank are not actually in the vault so that even if a robbery occurs, there is no loss of the deposits. Thus, the vault has low expected loss.
Despite all these factors, from time to time, a bank vault is breached, even then they are widely considered to be secure. Credit card is another such example as most consumers use credit cards and are reasonably comfortable in using these plastic cards. These are considered acceptably secured. The cards and card numbers contain some elements of technical and physical security and few cards contain a picture of the legitimate credit card holder and bear the holder’s signature. Credit card companies deploy sophisticated mechanisms such as analyzing spending patterns to detect fraud.
While forging a single credit card may not require much of the organization’s resources, forging and using many cards which may generate a large loss require considerable resources. The credit card holder is protected from loss by laws which limit the holder’s financial obligation losses. Credit card fraud is widespread and a card issuer is certain to encounter fraud, even though the instance of fraud is low compared to the total number of transactions. From a user’s perspective, there are so many cards with widespread use that the likelihood of an individual encountering a problem is very small.
Further, the lack of data and message security on the Internet has also become a serious problem due to the increasing number of merchants trying to spur commerce on the global network. For instance, credit card numbers in their plain text form, create a risk when transmitted across the Internet where the possibility of the number falling into the wrong hands is relatively high. Just the thought of “sniffer” programs which collect credit card numbers, en masse, is enough to keep merchants away from on-line shopping.
In short, the lack of business transaction security is widely acknowledged as a major impediment to spread E-commerce. Historically, computer security was provided by the use of account passwords and limited physical access to a facility to bonafide users. As users began to dial in from their PCs and terminals at home, these measures are being considered insufficient. With the advent of remote users on inter-networks for conducting commercial transactions on mobile computers and through wireless technologies, simple password schemes are not sufficient to prevent attacks from sophisticated hackers.
However, there are certain peculiarities to the issue of security. The first issue is that security is never absolute. The bank vault though can be breached but is still considered secured. The second peculiarity of security is that there is an economic trade-off among the cost of security, expectation of loss, and the cost of breaching security. From the perspective of an organization, a rupee spent on security is justified when it reduces the expected loss by more than a rupee.
When security spending reaches the point where the cost of additional security exceeds the incremental loss reduction, then it offers no more value protection and security is considered adequate. From other perspective, security is adequate when the expected yield is less than the cost of breaching security. For rational asset holders and opponents, the notions are equivalent. The characteristics that define security are two viz. securities are never absolute and security adequacy is an economic decision.