Last Updated 06 Jul 2020

An Investigation of online banking usage: A case study of Pakistan

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Introduction to E-BANKING

The world is changing at a staggering rate and technology is considered to be the key driver for these changes around us. An analysis of technology and its uses show that it has permeated in almost every aspect of our life. Many activities are handled electronically due to the acceptance of information technology at home as well as at workplace. Slowly but steadily, in Pakistan banking customer is moving towards the internet banking. The ATM and the Net transactions are becoming popular. But the customer is clear on one thing that he wants net banking to be simple and the banking sector is matching its steps to the march of technology. E-banking or Online banking is a generic term for the delivery of banking services and products through the electronic channels such as the telephone, the internet, the cell phone etc. The concept and scope of e-banking is still evolving. It facilitates an effective payment and accounting system thereby enhancing the speed of delivery of banking services considerably. Several initiatives have been taken by the Government of Pakistan as well as the SBP (State Bank of Pakistan); have facilitated the development of E-Banking in Pakistan.

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E-Banking can be defining as the automated delivery of news and traditional banking products and services directly to customer through electronic and interactive communication channels. 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, Customers access e-banking services using an intelligent electronic device. Electronic banking is one of the truly widespread avatars of E-commerce the world over. Various authors define E-Banking differently but the most definition depicting the meaning and features of E-Banking are as follows:

Banking is a combination of two, Electronic technology and Banking.
Electronic Banking is a process by which a customer performs banking Transactions electronically without visiting a banking institutions.
E-Banking denotes the provision of banking and related services through Extensive use of information technology without direct recourse to the bank by the customer.

E-Banking transactions are rapidly getting very common amongst businesses entities and masses in Pakistan. This was reflected in a recent report prepared by State Bank of Pakistan, which read that the volume and value of online banking transactions in the Pakistan reached 17.4 million and Rs. 4.5 trillion respectively showing an increase of 8.9 percent in numbers and 7.9 percent increase in value compared to 12.1 percent increase in numbers and 8.2 percent increase in value in the previous quarter (SBP 4th Quarter Report).

This significant growth in e-banking is due to massive use of internet, especially high speed internet in Pakistan. Along with come the factors such as increasing number of free launce workers in the country who work for overseas companies tend to use E-Banking instead of paper banking. Furthermore, those who are living abroad are also increasingly interacting with their bank accounts back in Pakistan from internet. We also see that E-Banking standards maintained by banks in Pakistan are not bad; though some may have bad experiences, but largely, systems are stable and reliable. This reliability and benefits, such as, time saving with E-Banking are fetching more users by each passing day. With this rise in E-Banking usage, there are certain restrictions too, such as daily and monthly transaction limits are insufficient; which actually hinders business entities and individuals to make E-Banking as their primary banking mode. Bankers say that this low limit is to increase security and allowing least chances for fraudulent activities, but on other hands, consumers require more luxury though with safety.


What are the barriers in using online banking in Pakistan?

What is the impact of online banking on banking business in Pakistan?


To explore the customer perception towards using online banking in Pakistan.

To review extent theories and models to find out the barriers and remedies in using online banking

To analyze the role of online banking in increasing the business for banking sector in Pakistan.

To identify the remedies and to suggest how to promote the use of online banking in Pakistan.

Barriers in Using Online Banking in Pakistan Although online banking is the latest development in banking sector that has added new dimensions to banking transactions by making it more convenient. But, there are some serious problems that you may encounter while banking through the internet, due to which many still prefer to go directly to the banks instead of availing this facility.

Following are the main berries preventing banking consumer to use online banking in Pakistan;

Computer Illiteracy & Limited Internet Access

A country like Pakistan computer literacy is the biggest hurdle in using of internet banking as computer literacy rate is comparatively lower than other Asian countries. As we know for carrying out internet banking properly, a basic knowledge of computers and the Internet is required, which limits the number of people willing to avail this facility. Many people, who are not comfortable with computers and the Internet, often find it difficult to use internet banking. Therefore, for beginners, internet banking is really a time consuming. In addition to this, people also find a difficulty in trusting a completely mechanized system like internet banking, in case of financial matters. In many instances, a simple mistake, like clicking a wrong button, may create a big problem. And so, many individuals often keep wondering if they have properly executed the transaction. However, this uneasiness can be avoided by printing the transaction receipt and keeping it with oneself, until the bank statement is received.

Security Concerns

Internet and Computer security is also main hurdle in use of online banking in Pakistan. While banking through the internet, you have to be careful about the security of your internet bank account. The security of your internet bank account depends to a great extent on the security of your computer, password and pin number. Any leakage of information regarding your password or pin number and banking transactions can allow computer hackers to gain access to your bank account, which is the most common internet banking problem. This can lead to unauthorized and criminal transactions being conducted without your knowledge. By the time you get your bank statement and detect such transactions, it may be too late.

In internet banking, you have to make sure that the banking session is secure, as in many instances you may encounter proxy websites. These proxy websites can easily access your bank account, if they can crack your user name, password or pin number. Due to such security problems, many people are apprehensive about internet banking.

Without Technical Assistance from Bank Staff

Sometimes, internet banking can be time consuming and tedious, as many websites take quite a long time to get started. Besides this, your internet bank account may also take considerable time to get started. You may also encounter technical difficulties and connectivity problems while conducting internet banking transactions. There is a customer care department in almost every bank to look into such matters, but often you may not be able to get the necessary assistance due to the congestion in the computer and telephone network. On the other hand, in normal banking, you can simply converse with the bank officials to sort out any problem.

Impact of Online Banking on Banking Business in Pakistan

The adoption of electronic banking has enhanced efficiency of banking sector by making it more productive and effective. E-banking is a successful strategic weapon for banks to remain profitable in a volatile and competitive marketplace of today. Clearly, despite the threats posed by non-bank financial intermediaries, there is enormous opportunity for farsighted banks to reap the rewards available from e-banking. If banks are to retain their competitiveness, they must focus on customer retention and relationship management, upgrade and offer integration and value added services, especially in the consumer-banking sector. Technology has indeed transformed the Pakistan banking sector, but the technology itself has undergone a sea-change. It has been an arduous yet learning journey for the Pakistani banking system which has passed the milestones of Automated Ledger Posting Machines, the mainframes, the minicomputers, microcomputers and PCs. Infect, the banking system has mirrored the developments in the computer Industry. Delivery channel developments came next, with the ATM changing banking rules and forming the base for innovative channel developments such as Internet banking and the recent ones to enter the field-call centers and mobile banking. Now, the current and infect lasting trend will be that of centralization through implementation of centralized banking solutions which will integrate a banking applications, processes and delivery channels. This has in turn, led to a surfeit of backend developments such as security tools, networking and data warehousing. Put simply, a bank has come to rely on technology like never before. In the past, banking was influenced by technology, now it seems technology is influenced by banking.


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Katyak, N.K., (2001). Criminal law in cyberspace. University of Pennsylvania Law Review, 149(4).

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