Assignment on Online Banking

TERM PAPER ON ONLINE BANKING SERVICE IN BANGLADESH 1. DEFINITION OF ONLINE BANKING Online bankingis a service commoti adeptd by banks that aloneows nebholders 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, very much(prenominal) as having a personal computer with Internet access and web browser. If those conditions argon satisfied, online banking flush toilet be performed from anywhere in the world.To minimize the risk of fraud, online banking is enabled by means of with(predicate) a secure server, which grants the individual a private access to his or herbankaccount. Online banking is designed to streamline banking chores that otherwise require considerable cartridge clip and effort. Thus, online banking facilitates head up access to account details, enables change over of funds, allows for multiple bills compensations, and performs an array other feats. Online banking is accessible twenty four hours, seven-spot days a week, regardless of the banks working hours. Today, or so banks offer online banking function. . HOW MANY BANKERS PROVIDE ONLINE BANKING SERVICES IN BANGLADESH Bangladesh Bank Governor Dr Atiur Rahman said 79 percent institutions under the state of matters banking arena argon providing online service at present. He said, 37 banks be providing all- bring out online service, while six are aimting preparations to provide online service. Almost 79 percent 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 July2012Science and Information Communication engineering science Ministry Secretary Nazrul Islam Khan, Bangladesh Telecommunication Regularity Commission Chairman General (Retd) Zia Ahmed, FBCCI President AK Azad, head Marketing Officer of Eco-Bha rat Anand Ramanand, Dell Bangladeshs Country Director Sonia Bashir spoke at the inaugural session. Dr Atiur said, 23 banks were given the approval of providing online services up to June, 2012. Amongst them, 14 banks postulate already started the service. 3. PROSPECT OF ONLINE BANKING SERVICE IN BANGLADESH Information technology environment changes rapidly.It is estimated that the number of Internet users in Bangladesh lead increase in a new-fangled years. The number of physical branches ordain be decreased (the profile of physical branches go forth change to advice and support centers) and most of the transactions will be concluded via main e-banking channels online Internet bank and m-banking services. Rapid growth of e-banking in Bangladesh is expected. 4. ADVANTAGE OF ONLINE BANKING SERVICE IN BANGLADESH What are the three greatest things intimately the Internet? E- trip, music, and online banking Whether for the convenience or the control, online banking is an aspect of banking that nobody finish resist.Our children will probably laugh when we tell them people used to actually go to a bank to pay bills. Online banking rocks Many of the benefits of doing your banking online are obvious You dont have to wait in line. You dont have to plan your day around the banks hours. You can look at your balance whenever you want, not just when you get a recountment. there are some hidden benefits too. As a young bank customer, youre just knowledge 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, youll continuously be aware of whats happening in your bank account. For those experienced spenders, this option is far much appealing than the sudden discovery that youre broke Its also stabilizing to watch how much interest youre gathering on investments and savings or what service charges you have becomered. What to expect Here are som e of the features available through online banking meet balances Checking your balance doesnt 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 transmits you a bill by e-mail instead of a printed one by regular mail. Transfer funds When you select Transfer Funds, youll be asked where to transfer the money to and from, when, and the amount.Set up recurring bill wagess or transfers If you make a regular retribution every month, it might be convenient to send up an automatic withdrawal from your account. Monitor CIBC investments If you have any CI BC investments, you can keep an eye on those stocks or mutual funds here. Send and conform to an INTERAC e-TransferTM2 This could be the end of the birthday cheque You can receive transfers from other peoples accounts, or set up transfers from your account to someone elses. The recipient will get an e-mail notifying them of the transaction.View CIBC VISA* accounts Al bearings a good place to monitor your spending. You can make your credit card payments online, right from your account. Order cheques We dont 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 game your accounts like a small business that you control every day. Once you get started, youll be hooked. Soon enough youll be checking your bank account as often as your e-mail. 5. FUNCTIONS OF ONLINE BANKING SERVICE IN BANGLADESHOnline 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 advance(a) 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, 7 days a week, so you can do it anytime, anywhere. Online banking allows us to perform various services with the visit 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 incision store. There is no need to stand in a long line on a weekend morn ing 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 bankers 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 curiously 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.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 data 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. . 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 employ for a credit card or a loan (a car loan, a student loan, a mortgage, a home equity loan, etc. ) from the analogous bank. If you have a good credit score and 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 fro m your bank. Online banking lets you compare all available offers and their terms, for example APY or matureness periods. When you confirm the purchase, the funds will be automatically deducted from your account. 8. Order travelers checks. You can order American Express Travelers 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 shouldnt leave you red-facedYou can increase your overdraft online. Log in to online banking and click on Overdraft in the menu. 10. Order a cheque hold up. Save yourself at least one trip to the bank by ordering cheque book online. You will need to visit your bank once when you get a confirmation message that your cheque book is ready for collection. 11. View up-to-the-minute account statements and balance. 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 log in information is re quired. 15. Change jobber details. Have you moved to a new house? Changed 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 to send this information by e-mail. 16.Utilize investment research. You can receive real-time quotes, analytics, news and stock market place 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. 9. substantiate terms and conditions. Did you forget your interest rates or payment due date? You can verify all information about your account online. 20. prattle with your customer assistant department. If you need help, you can send message to your banks customer assistant department. They will help you solve your problem. 6. SWOT compendium OF ONLINE BANKING SERVICE IN BANGLADESH SWOT Analysis To find out the viability of a particular product we essential 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 we the following SWOT Analysis is considered. Strengths Internet Banking is new in our market. Only a few banks are now fling internet services in solving banking problems. Most of the banks are offering only accounting information online. Actual fund transfer and fund disbursement is not possible in all the banks that are offering internet services. So this product will enjoy the benefit of a first mover. It i s cheap both for the banks and the customers. The bank will be able to lower down the overhead costs and make more profit out of it.Internet banking will require less 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 thither 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 the internet banking services. The transaction can be cancelled only via internet. The internet infrastructure of our country is not that much supportive to provide all time access to the web. So at that place will be a problem in executing the serv ice 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 account with. The internet services are becoming very common to us.So a service offered through the internet will be widely accepted in the near future. Threats battalion have concern about security and privacy. They like to feel their money with their hand. They actually dont believe in virtual money transfer. 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 marginalized the customers who do not have internet access or who are not technologically sound.Despite the presence of online Internet service in Bangladesh, its scope is largely under utilized. The reasons include high service charges, insufficiency of awareness, poor telecommunication systems, regime policy, low buying power of potential clients, and lack of institutional support. 7. CHALLENGES / RISKS OF ONLINE BANKING SERVICE IN BANGLADESH Generally it is believed that banks in Bangladesh are facing different problems adopting e-banking. Inefficiency and lack of becoming knowledge of the top wariness of the last generation about ebanking may have to be put at the first place.The top management set the way for future knowledge. For the change they must have understood its significance and prospect. Only so, proper strategic plan could be done, appropriate modification with changing national and international business and technological environment could be make, the coming challenges from the national and international. competition successfully faced, and the market share retained and gained. The lack of communication channel and technological and technic al infrastructure support may be seen as the second crucial challenges of e-banking in Bangladesh.It is not enough that there are enough communication channels, but they must be efficient, competitive, competent, cost effective and supportive to the services. In the millennium of ICT every nation has to think global, so worldwide efficient networking and WAP have to be ensured. Ensuring mature technology is also very important for successful introduction of the 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 the cost of the contemporary technology.In this way, the 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 suc h services cant be made competitive with hired or imported human resources. So, respective educational institutes must be established for the supply of the experts for the management of the hard- and software of the sectors. It is expected that a part of the existing employees both from the rank and file may resist the change.To motivate and integrate them in the change, training and reorientation program must be launched. Security of the services is very important to popularize it. To protect the service from piracy and fraudulency reliable security systems must be ensured. In this regard, government, banks, and Bangladesh Bank must work together. So and so, ways and means must be found to protect fraud and money laundering but at the same time ensuring fund transferring. 8. RECOMMENDATION / SUGGESTIONS OF ONLINE BANKING SERVICE IN BANGLADESHMost of the countries have adopted E-banking and the consumers seem to like the convenience of E-banking despite some continuing hesitancy. Th e widespread uses 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, are and to a lesser extent gaining popularity. In addition, as more people purchase personal computer and use the internet, home banking should become more widely accepted. But a cashless or check less financial system is still not in the state of foreseeable future.Though there are 28 banks in Bangladesh, mostly head quartered in Dhaka. Most of these banks do not offer online or electronic service 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 the policy for the increase in 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 in ICT is going to increase by at least 2% of ADPin coming years. The ICT companies will get preferential terms which will be able to meet up 20% of its tax 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 if 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. later on 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 that is 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 unforesightful time to enjoy the fruits of information age.It will be only possible when there will be political commitment with better IT infrastructure, internal network, country domain and above all ahigh speed fiber optic link to the information superhighway. In order to ensure a 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 purpose followed. * Government should compel the banking sectors to automate their operation and going online by a specific period. Provide adequate training and technological support to develop the manpower. * cu rb legal framework. * Proper infrastructure development. * Government should implement the cyber laws to ensure proper security about customers information (i. e. Credit card number) . * Government should establish proper educational institution to create efficient IT professionals to support e-banking in Bangladesh. * Developing of 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 fully automated system. * Banks should have adequate research and technological play down in this regard. * Bank can charge normal profit to enlarge the market size on the electronic banking products. * Political commitment to improve constitution and institutional strength is essential for successful application of e-banking. * As e-bank users mostly use ATMs and POS i n most cases, the banks should emphasize on providing uninterruptible service.