Online Banking Service in Bangladesh

Definition of online banking

Online banking is a service offered by banks that allows account holders to access their account data via the Internet. In order to take advantage of online banking, an account holder would need to meet several technological requirements, such as having a personal computer with Internet access and a web browser. If those conditions are satisfied, online banking can be performed from anywhere in the world.

To minimize the risk of fraud, online banking is enabled through a secure server, which grants the individual private access to his or her bank account. Online banking is designed to streamline banking chores that otherwise require considerable time and effort. Thus, online banking facilitates direct access to account details, enables the transfer of funds, allows for multiple bill payments, and performs an array of other transactions. Online banking is available twenty-four hours a, seven days a week, regardless of the bank's working hours. Today, most banks offer online banking services.

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How Many bankers provide online banking services in Bangladesh

Bangladesh Bank Governor Dr. Atiur Rahman said 79 percent of institutions in the country's banking sector are providing online services at present. He said, "37 banks are providing all-out online service, while six are getting preparations to provide online service. Almost 79 percent of institutions are under online service now." Dr. Atiur came up with the comment at the inauguration of the 4th International e-banking and Mobile Commerce Conference as the chief guest at a hotel in Dhaka Monday, 10th July, ’2012

Science and Information Communication Technology Ministry Secretary Nazrul Islam Khan, Bangladesh Telecommunication Regularity Commission Chairman General (Retd) Zia Ahmed, FBCCI President AK Azad, Chief Marketing Officer of Eco-Bharat Anand Ramanand, Dell Bangladesh's Country Director Sonia Bashir spoke at the inaugural session. Dr. Atiur said, "23 banks were given the approval to provide online services up to June 2012. Amongst them, 14 banks have already started the service."

The prospect of online banking service in Bangladesh

The information technology environment changes rapidly.

It is estimated that the number of Internet users in Bangladesh will increase in recent years. The number of physical branches will be decreased (the profile of physical branches will change to advise and support centers), and most of the transactions will be concluded via main e-banking channels: online Internet banking and m-banking services. The rapid growth of e-banking in Bangladesh is expected.

Advantages of online banking service in Bangladesh

What are the three greatest things about the Internet? E-mail, music, and online banking! Whether for convenience or control, online banking is an aspect of banking that nobody can resist.

Our children will probably laugh when we tell them people used actually to go to a bank to pay bills. Online banking rocks! Many of the benefits of doing your banking online are obvious: You don't have to wait in line. You don't have to plan your day around the bank's hours. You can look at your balance whenever you want, not just when you get a statement. There are some hidden benefits too. As a young bank customer, you're just learning how to manage your money and observe your spending patterns. Online banking allows you to watch your money on a daily basis if you want to.

By keeping close tabs on your funds, you'll always be aware of what's happening in your bank account. For those experienced spenders, this option is far more appealing than the sudden discovery that you're broke! It's also helpful to watch how much interest you're gathering on investments and savings or what service charges you have incurred. What to expect Here are some of the features available through online banking: View balances: Checking your balance doesn't require much work. You simply select Account balances and take a look at your balance and past transactions.

If you have more than one account, you can also do transfers between accounts. Pay bills: To pay your bills online, you just need to add to your account the names of the companies you wish to pay bills to. In the Pay Bills section, select Add payees, search for the name of the company, and fill in the account number for each company. You can also sign up for the E-bills service that sends you a bill by e-mail instead of a printed one by regular mail. Transfer funds: When you select Transfer Funds, you'll be asked where to transfer the money to and from, when, and the amount.

Set up recurring bill payments or transfers: If you make a regular payment every month, it might be convenient to set up an automatic withdrawal from your account. Monitor CIBC investments: If you have any CIBC investments, you can keep an eye on those stocks or mutual funds here. Send and receive an INTERAC e-TransferTM2: This could be the end of the birthday cheque! You can receive transfers from other people's accounts or set up transfers from your account to someone else's. The recipient will get an e-mail notifying them of the transaction.

View CIBC Visa* accounts:

Always a good place to monitor your spending. You can make your credit card payments online right from your account. Order cheques: We don't need them much anymore due to online banking and debit purchases, but if you still use cheques, you can order them directly from the CIBC website. Take control. Online banking helps you become more of a banker, running your accounts like a small business that you control every day. Once you get started, you'll be hooked. Soon enough, you'll be checking your bank account as often as your e-mail.

Functions of online banking Services in Bangladesh

Online banking is the practice of making bank transactions via the Internet. It will give you an excellent opportunity to bypass the time-consuming, paper-based aspects of traditional banking in order to manage your finances more efficiently. By switching to electronic bills, statements, and payments, the average American household can save 6. 6 pounds of paper in one year! And you can catch any fraudulent transactions faster than if you received a statement by snail post. Thanks to innovative technology and the Internet in particular, we no longer have to leave the house to make payments.

Online banking is available 24 hours a day, seven days a week, so you can do it anytime, anywhere. Online banking allows us to perform various services with the click of a mouse. You can:

1. Pay a bill. Electronic bill payment service allows a depositor to send money from his or her online account to a creditor or merchant, for example, to a public utility or a department store. There is no need to stand in a long line on a weekend morning to handle your transactions! The payment is virtually instant, though some financial institutions can wait until the next business day to send out the payment. If it is necessary, the bank can generate and mail a paper cheque or banker's draft to a creditor who is not set up to receive electronic payments.
2. Schedule payments in advance. Most banks offer customers the ability to schedule a payment on a specified date. Once the amount is entered and the payee is checked off, the funds are automatically deducted from your online bank account. It is especially useful if you always forget due dates. For example, you can schedule credit card or mortgage payments to make sure that you will not incur late fees and damage your FICO score.
3. 3. Transfer funds. Do you want to send money quickly and securely? With online banking, you can make money transfers between your own accounts or send money to a third-party account. All you need is recipient/payee information and enough funds in your account. Quite often, the operations are performed in real-time.
4. Manage all your accounts in one place. Online banking is a great time saver because it provides an opportunity to handle several bank accounts (checking, savings, CDs, IRAs, etc. ) from one site. Most new accounts you open will be automatically added to online banking.
5. View images of your checks online. Do you need a copy of a paid check? With online banking, you can view and print scanned images of the front and back of all checks you have written. It is easy and convenient.
6. Apply for a loan or credit card. Having an account online, you can apply for a credit card or a loan (a car loan, a student loan, a mortgage, a home equity loan, etc. ) from the same bank. If you have a good credit score and a long relationship history with your bank, your application is likely to be approved.
7. Purchase and manage CD accounts. If you have some amount of money you want to invest, you can purchase a certificate of deposit from your bank. Online banking lets you compare all available offers and their terms, for example, APY or maturity periods. When you confirm the purchase, the funds will be automatically deducted from your account.
8. Order traveler's checks. You can order American Express Traveler's Cheques online. The bank will typically charge your online account for the amount of the cheques you bought and an express delivery fee.
9. Increase your overdraft. Going into the red shouldn't leave you red-faced! You can increase your overdraft online. Log in to online banking and click on 'Overdraft' in the menu.
10. Order a checkbook. Save yourself at least one trip to the bank by ordering checkbooks online. You will need to visit your bank once when you get a confirmation message that your checkbook is ready for collection.
11. View up-to-the-minute account statements and balances. There is no need to wait for the bank statement to arrive in the snail post to check account balances. You can view all transactions and withdrawals every day just by logging in to your online account. In addition, you can immediately notice errors or unauthorized transactions in the statement.
12. View automatically updated spending report. All your purchases are sorted into familiar categories automatically - no receipts to save, no expenses to enter. It is easy to see where your money goes!
13. Track your payment history. Online banking gives you an opportunity to search your payments by transaction type, date, description, or amount. When did you last pay Company X? When did you buy your computer? To whom did you make your most recent payment? Your bank knows the answers.
14. Integrate the data with personal finance programs. Online banking lets you import electronic payment data in personal finance software such as Quicken or Microsoft Money. You will be able to access your online accounts directly from your personal finance program. An Internet connection and online account login information are required.
15. Change contact details. Have you moved to a new house? Change your telephone number? You can log in to your online account and change contact information (e-mail address, telephone number, password, etc. ). It is more secure than sending this information by e-mail.
16. Utilize investment research. You can receive real-time quotes, analytics, news, and stock market information to make a more educated decision.
17. Take advantage of online brokerage. Internet banking lets you invest online. You can place and confirm trades 24 hours a day, seven days a week. Most banks provide a wide range of money market instruments from various issuers.
18. Get alerts. This service allows you to receive timely e-mail messages from your bank about any critical changes related to your Internet accounts. For example, you can get alerts when you make a withdrawal or change your contact information.
19. Verify terms and conditions. Did you forget your interest rates or payment due date? You can verify all information about your account online.
20. Chat with your customer assistant department. If you need help, you can send a message to your bank's customer assistant department. They will help you solve your problem.

SWOT analysis of online banking service in Bangladesh

 Analysis: 

To find out the viability of a particular product, we must perform a SWOT Analysis of the product. This will analyze the Strengths, Weaknesses, Opportunities, and Threats of the particular product.

For analyzing the performance of Internet Banking in Bangladesh, the following SWOT Analysis is considered.

Strengths 

• Internet Banking is new in our market. Only a few banks are now offering internet services to solve banking problems. Most of the banks are offering only accounting information online. Actual fund transfer and fund disbursement are not possible in all the banks that offer internet services. So this product will enjoy the benefit of a first mover.
• It is cheap both for the banks and the customers. The bank will be able to lower the overhead costs and make more profit out of it. Internet banking will require fewer manual workers. Again the customers will be able to save time as well as money for their transaction needs.
• Internet banking is convenient as the service is available all the time at just a click away.

Weaknesses: 

• Security breakdown: The system will have a problem with the identification of the individual who is initiating the transaction. In Bangladesh, the identification of an individual is not yet supported digitally. So there will be a problem in moving to the Internet era for banking purposes just now. First, we will have to develop a digital database of the users of internet banking services.
• The transaction can be canceled only via the Internet. The internet infrastructure of our country is not that supportive of providing all-time access to the web. So there will be a problem in executing the service with its full functionality.

Opportunities: 

• Non-branch banking is becoming popular in our country. Many banks are now offering non-branch banking facilities. A person can withdraw or deposit money in any branch of the bank he has an account.
• Internet services are becoming very common to us.

So a service offered through the Internet will be widely accepted in the near future.

Threats : 

• People have concerns about security and privacy. They like to feel their money with their hand. They actually don't believe in virtual money transfers.
• In the field of IT, new technology is coming every day. The one which is very popular today might get obsolete tomorrow. So to have a competitive edge over the competitors, the banks must always update their services.
• The movement towards online banking might marginalize customers who do not have internet access or who are not technologically sound.

Despite the presence of online Internet services in Bangladesh, its scope is largely underutilized. The reasons include high service charges, lack of awareness, poor telecommunication systems, government policy, the low buying power of potential clients, and lack of institutional support.

Challenges / Risks of online banking Services in Bangladesh

Generally, it is believed that banks in Bangladesh are facing different problems with adopting e-banking. Inefficiency and lack of adequate knowledge of the top management of the last generation about e–banking may have to be put in the first place.

The top management set the way for future development. For the change, they must have understood its significance and prospect. Only so the proper strategic plan can be made, appropriate adjustments to changing national and international business and technological environments can be made, and the coming challenges from the national and international. The competition was successfully faced, and the market share was retained and gained. The lack of communication channels and technological and technical infrastructure support may be seen as the second crucial challenge of e-banking in Bangladesh.

It is not enough that there are enough communication channels; they must be efficient, competitive, competent, cost-effective, and supportive of the services. In the millennium of ICT, every nation has to think globally, so worldwide efficient networking and WAP have to be ensured. Ensuring mature technology is also very important for the successful introduction of e-banking, which includes adequate software. Modern technology is available but frequently very costly, but the countries like Bangladesh have other decisive comparative advantages that could be used to compensate for the cost of modern technology.

In this way, modern technology could be made economically viable, cost-effective, and competitive even in the world market. Qualified human resource is another factor that has to be considered, which means experts have to be made available in the market. In the long run, such services can't be made competitive with hired or imported human resources. So, respective educational institutes must be established for the supply of experts for the management of the hard- and software of the sectors. It is expected that a part of the existing employees, both from rank and file, may resist the change.

To motivate and integrate them into the change, a training and reorientation program must be launched. Security of the services is very important to popularize it. To protect the service from piracy and fraudulence, reliable security systems must be ensured. In this regard, the government, banks, and Bangladesh Bank must work together. So and so, ways and means must be found to protect against fraud and money laundering while, at the same time, ensuring fund transferring. 8.

Recommendation / Suggestions for online banking service in Bangladesh

Most countries have adopted E-banking, and consumers seem to like the convenience of E-banking despite some continuing hesitancy. The widespread use of ATMs has paved the way for greater acceptance of other forms of electronic money, such as smart cards and POS. Direct deposit and, to a lesser extent, electronic bill payment is and to a lesser extent gaining popularity. In addition, as more people purchase personal computers and use the Internet, home banking should become more widely accepted. But a cashless or checkless financial system is still not in the state of the foreseeable future.

Though there are 28 banks in Bangladesh, mostly headquartered in Dhaka, most of these banks do not offer online or electronic services such as Direct Deposit. There are some ATM machines, though not nearly as concentrated as in a developed economy. The Ministry of Science, Information and Communication Technology has given out a policy for the development of the IT sector.

The ministry has concentrated on the following sections:

• Human Resources Development through Education and Training
• ICT Infrastructure development
• Research and Development in ICT
• Development of ICT Industry Development of E-Commerce
• E-Government / E-Governance establishment
• Establishment of Legal Issues.

The Government spending on ICT is going to increase by at least 2% of ADP in the coming years. The ICT companies will get preferential terms that will be able to meet up to 20% of their revenue expenditure. BCC has created a centralized fund for R&D which would encourage contributing 1% of all profits from ICT-enabled services to the HRD fund. This will greatly help the development of ICT in Bangladesh. The software support for internet banking, i.e., Flexcube, is available in Bangladesh.

Again Bangladesh Government is working on the copyright law and the preservation of intellectual property act. After the successful implementation of all these policies and strategies, we are expecting that more than 50% of the banks will be offering internet banking facilities which are now 12% only. E-banking is in its nascent state in Bangladesh. At present, Information Technology (IT) is a subject of widespread interest in Bangladesh. The government has declared IT as a thrust sector and set up a vision of Digital Bangladesh in 2021. But Bangladesh has a long way to go in a very short time to enjoy the fruits of the information age.

It will be only possible when there is a political commitment with better IT infrastructure, internal network, country domain, and above all, a high-speed fiber optic link to the information superhighway. In order to ensure the successful practice of e-banking in Bangladesh, we recommend the following.

• E-banking systems should be simple to use, fast, and user-friendly.
• E-banking services should be standardized so that wherever the solution is used, the customer is familiar with the procedure followed.
• Government should compel the banking sectors to automate their operation and go online by a specific period. Provide adequate training and technical support to develop the manpower.
• Appropriate legal framework.
• Proper infrastructure development.
• Government should implement cyber laws to ensure the proper security of customers' information (e.g., Credit card numbers).
• Government should establish proper educational institutions to create efficient IT professionals to support e-banking in Bangladesh.
• Developing integrated e-banking software. Government, in collaboration with the banks, should educate and inform its citizens and customers on the workability and effectiveness of E-banking.

This will increase the confidence level of customers.

• The clearing house operation in Bangladesh should be a fully automated system.
• Banks should have adequate research and technological background in this regard.
• Banks can charge normal profits to enlarge the market size of electronic banking products.
• Political commitment to improving governance and institutional strength is essential for the successful application of e-banking.
• As e-bank users mostly use ATMs and POS in most cases, the banks should emphasize providing uninterruptible service.

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