1

Chapter
01

In
tr
od
uc
tio
n

Introduction

2
1.1: Origin of the study
This report is prepared for Kartik Chandra Mondalo Course instructor of
Electronic banking (FIN-611) Faculty of business at ASA University
Bangladesh as a partial requirement of the course. Our course instructor has
assigned us to make a report on the current status and prospect of E banking
in bangladesh. The standard procedure for the long, formal report is followed
here as part of the instruction of the course instructors.

1.2: Objective of the Study

There are several objectives to conduct the study. These are:
To fulfill the partial requirement of the Electronic banking (FIN-611)
course offered in MBA program.
To gather adequate knowledge about present status, problems and prospect
of E- banking in Bangladesh.
Enhance individual performance.
To improve our skills on report writing.
To meet the curiosity in this stated subject.

1.3: Methodology
The information for the report was collected from secondary sources.

Secondary data has been collected from various publications and survey

reports.
We use sampling for analyzing current status of E banking in Bangladesh. For
this purpose we use stratified sampling. Our sampling consists of five bank
from three different sectors of private commercial bank, foreign bank and
nationalized bank.

Dutch bangle bank limited

Eastern bank limited
Dhaka bank limited
Standard chartered bank limited
Sonali bank limited

Private commercial bank

Private commercial bank
Private commercial bank

foreign bank
nationalized bank

3
1.4: source of data
We collected our data from websites of the mentioned bank and various survey
report and other publications.

1.5: Limitations
Every study has some limitations. We faced some usual constraints during the
completion of our report. The major limitations are:

Lack of experience acted as constraints in the way of careful exploration on

the topic.

Busy working conditions.

Chapter
02

Ov
er
vi
e
w
on
EBa

5
E-Banking
The term Internet Banking or E-Banking Internet both are used as supplement. EBanking is the one of the major part of E-Financing. E-Banking is 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, payments and settlements, documentary collections and credits,
corporate and household lending, card business and some others (UNCTAD, 2014).
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 from 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 cases 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 Multimat, permitting them to effect
the same account examination, payment and transfer operations without consulting
the bank staff.
Now a day due to emerging global economy, e-commerce and e-business have
increasingly become a necessary component of business strategy and a strong
catalyst for economic development. The new information technology is becoming an
important factor in the future development of financial service industry, and
especially banking industry.

Economic Aspect of E-Banking in Bangladesh

Advantages of e-banking in Bangladesh:

6
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 countrys economic
health; Proper planning and monitoring; Proper use resources.

Job creation:
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 customers 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.

7
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.
Funds 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:
1.
2.
3.
4.

Lower operational costs of banks

Automated process
Accelerated credit decisions
Lowered minimum loan size to be profitable.

Potentially lower margins:

1. Lower cost of entry
2. Expanded financing reach
3. Increased transparency.

Expand reach through self-service:

1. Lower transaction cost
2. Make some corporate services economically feasible for society
3. Make anytime access to accounts and loan information possible.

Chapter
03

Pres
ent
Statu
s of
E
bank
ing
in

9
3. Present status of e-banking in Bangladesh
As a third world developing country, Bangladesh is far behind to reach the expected
level of global banking system. According to a report published in The Daily Star
(4th April, 2015) Bangladesh ranked 118th in the global Network Readiness Index in
2009-10 up from 130th a year ago, showing an upward trend in the information and
communication technology sector.

Banking industry in Bangladesh

Total numbers of Banks in Bangladesh are forty seven. Banking sector in
Bangladesh on the basis of utilization of electronic devices can be subdivided into
three groups
1. Foreign Commercial Banks
and Private Commercial banks especially
2nd(except few banks) and 3rd generation Private Banks :Fully Online
banking;
2. 1st generation private banks and some 2nd generation Private Commercial
Banks: Medium range Online banking system ;
3. Nationalized Commercial Banks, Specialized Banks and Few foreign Bank
branches of this subcontinent: Low grade online banking system.
At present the banks in Bangladesh are using the limited electronic banking
services. It is expected that bank can attain more profit and offer better services to
its customers by, introducing on line banking facilities.

Online banking practice in foreign banks:

The foreign commercial banks operating in Bangladesh like Standard Chartered
Bank, Citi Corp. N.A. and the HSBC are the pioneers to introduce the electronic
banking facilities. They provide ATM, Debit Card, Credit Card, Home Banking,
Internet Banking, Phone Banking, on line banking etc. Services.

Online banking practice in indigenous banks

Among the indigenous banks, the Private Banks are ahead of the public banks.
Prime bank ltd. , Dhaka bank ltd., BRAC bank ltd., Dutch-Bangla bank ltd. , Eastern
and Mercantile bank ltd., are already stepped on
towards electronic banking
facilities. Apart from these banks, Mutual Trust Bank ltd., also
introduced ATM
service. Among the four Nationalized Commercial Banks (NCBs), Janata bank ltd.,
has some access to the electronic banking facilities. Bangladesh Bank, the Central
Bank of Bangladesh, is also trying to formulate the wide structure of electronic

10
banking facilities. All of these private banks offering limited on line banking
services. Most of these banks only offer services by providing ATM card. Most of
them do not offer wide range of internet banking facilities which is the main
advantages of e-banking. Can deposit money in any branch and withdraw money
from ATM machine- is treated the best e-banking facility available in Bangladesh
While electronic money transfer starts in a limited edition. Sonali and Agrani bank
ltd., is also providing on line banking services in a limited scale. Rupali Bank ltd. is
also developing on line banking. BASIC bank which is 100 percent public owned but
served as private sector banking has a technological advancement.

E banking software supplier:

Local software companies have been starting competition to supply useful complete
banking software with all the basic features of banking module. However, many
forms of electronic banking services are not possible to offer in Bangladesh at this
moment due to the technology backwardness, infrastructural underdevelopment
and legal infrastructure.

Bangladesh banks stand in connection to E-banking:

According to the report published in The Financial Express(3rd
November,2009) Bangladesh Bank gave the ground breaking directives to
commercial banks through a circular issued on 2nd Novemebr,2009, saying
that from now on their clients can pay power, water, gas and phone bills from
bank accounts and transfer funds within a bank or to other banks.
The central bank said that online payments will be treated like any other cash
transaction although it reminded the banks that these money transfers would
be regulated by the country's strict Anti-Money Laundering Act.
Meanwhile, Bangladesh bank started automated 11Clearing house on trail
basis from 8th November, 2009.Bangladesh Bank also declared that the
clearing house wont accept any cheque from 1st April 2010 if size of the
cheque is not as per the guideline of the MICR system. But in developed
nations MICR procedure is now replaced by more sophisticated procedure
such as cheque truncation process.

11
In Bangladesh digital divide among the Dhaka city and rest of the country is
conspicuous. E-business as a whole is confined among very few business
organizations and on line banking business is expediting process of the e-business
of the country.

3.1 E-banking product available in Bangladesh

E-banking
product
and
wholesale
products
for
as
retail
and
fiduciary
customers. Ultimately the
through internet banking may
offered through other bank
description
of
e-banking
Automated teller machine:
An automated teller machine
telecommunication
device
institutions customers with a
transaction in a public space
clerk or a bank teller.
Debit card:
A debit card is a plastic card
payment method to cash. To
of a transaction is typically
after which the customer
the pin number. There is
the EFTPOS (electronic fund
terminal
contact
the
phone
line
and
mobile
authorized the transaction.
Credit card:
A credit card is a system of
small plastic card issued to

The
country
had only
about
400,000
credit
card
holders at
the end of
June last
year,
according
to
Banglades
h Bank
Payments
and
transactio
ns by
credit
cards
were
nearly
Tk21
billion in
June
2014--one of the
lowest in
the world.

services
can
include
corporate customers as well
products
for
individual
product and services obtained
mirror product and services
delivery channels. A brief
products are described below

(ATM) is a computerized
that provides a financial
method
of
financial
without a need for a human

which provides an alternative

make purchases. The amount
displayed on a card reader,
swipes the card and enters
usually a short delay while
transfer at point of sale)
computer network (over a
connection) to verify the

payment named after the

users of the system. A credit

12
card is different from a debit card in that it does not remove money from the users
account after every 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 institutions 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
point of sale system is in use.
Check Truncation:
This is such a service in which a financial institution doesnt 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.

13
Wire transfer:
Wire transfer is a process which ensures fast and appropriate timing of fund transfer
from the sender to the recipient. This kind of transfer of money could be either
within the country or abroad. Funds are transferred 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 mRemittance system. Mobile remittance service or m-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 countrys 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.

14
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.

3.2 Customers Response:

Out of five hundred customers who have been using on line banking system,
following results have been gathered from the questionnaire through using snowball
sampling technique. In following table Customers Response who have been using
on line banking system (% of Respondents who expressed Yes comment) is
presented.

Comment
On line Banking services is relatively
good than manual system
On line banking provides good Customer
service
Just in time services in Banking can be
provided
Bank Personnel behave properly
Dealing officer is well conversant about
their respective Desk work
Technologically improved but quality of
banking services worsen off

Dhaka(In
percentage)
79%

Chittagong(In
percentage)
65%

72%

61%

56%

48%

52%
48%

56%
47%

51%

44%

15
Better E-business environment

67%

61%

Some major reason of customer dissatisfaction

ATMs fall short of money
Slow bandwidth of internet may delay the transfer rate. (radio link and cable
are used for internet)
Bankers make delay to provide PIN number whenever client lose his
Credit or Debit card
Charges are higher for the card.

This
survey
result
demons
trate
that
people
thinks
that
online
banking
services
are
relativel
y good
then
manual
system,
but
they
not
satisfie
d with
the
quality
of
services
and
bank

16
3.3 Dutch Bangla Bank Limited as a pioneer
Number
Number
Number
Number

of
of
of
of

branches
customers
ATM
fast track

96 branches
1.50 million
1295
50

Core Banking Software:

The truly online core banking software, Flex cube has been running since
2004. To ensure better customer service, the bank is upgrading its core banking
software from its present version to Flex cube Universal Banking Solution
(UBS). In parallel, the whole setup of hardware is being upgraded to
cope with the increased volume of transactions from different delivery
channels. The core team formed in this regard is working day-night in
configuring & testing of the new system which is expected to go live soon.

Oracle FLEXCUBE Core Banking

Oracle FLEXCUBE Core Banking helps banks overcome the challenges of intense
competition, reduced margins, and increased customer expectations by creating a
unique competitive advantage built upon improved profitability and an extended
customer reach.
With Oracle FLEXCUBE Core Banking, banks gain a cost advantage through straightthrough processing and exception handling. In addition, the solution supports
regulatory requirements in key markets through a highly secure data management
system, which can easily integrate with third-party solutions at your bank.
Working in concert with Oracle Industry Reference Model for Banking, a
comprehensive repository of industry-specific processes, Oracle FLEXCUBE Core
Banking's application architecture supports agile and business processes
management using Business Process Execution Language (BPEL), service-oriented
architecture (SOA), and a Web services-based model. It enables integration of all
third-party applications, including in-house banking software, to facilitate simple
and complex business processes.

KEY TECHNICAL CAPABILITIES

24/7 processing of large transaction volumes, with high availability

Multiple delivery channel support, including branches, ATMs, point-of-sale

terminals, call centers, mobile devices, and internet banking

17

An XML Web-based user interface with context-sensitive help

Security management covering application and role-based access

Online validations and automated exception processing

Centralized, decentralized, and combination deployments

Ease of integration with existing systems using flexible Java Platform,

Enterprise Edition technology

Operational risk management controls, including limits, collateral, and

nonperforming assets

Up gradation of Switching Software

A remarkable percentage of transactions of DBBL are performed using the
most popular delivery channel ATM. As such, it is equally important to
have strong switching software to handle different types of transactions as well
as high volume of transactions. Considering this, the bank is upgrading its
switching software too. The upgraded software will not only ensure better
and quick response to the requested transactions, it will also be capable to handle
EMV transactions.

EMV Issuing & Acquiring

All the ATMs and POS terminals of DBBL are EMV-compliant. The EMV security
policy has been introduced by Euro pay, MasterCard and VISA jointly to protect
capturing card data and duplication of a card. We are the first Bank in Bangladesh
to ensure such security to our valued customers. DBBL has introduced EMV
compliant chip based MasterCard cards and VISA Cards for the first time
in Bangladesh which is the most secure card in the world. EMV complaints and
accepts the following cards:

EMV compliant chip cards of all the banks in the world;

Non-EMV Visa & MasterCard cards of all the banks in the world;
DBBL's proprietary cards (Nexus).

It took 3 years for DBBL to implement what Visa and MasterCard both deem as the
future card standard. It encompasses the digital age and the new technologies that
have emerged in the electronic age. Visa and MasterCard both realized that the
normal card is 40 years old and the amount of fraudulent transactions was losing

18
customers billions. North America will be having NexusPRO card compliant by 2016.
But now DBBL already the only fully NexusPRO compliant and certified. DBBL's
entire infrastructure (including ATMs) has had a costly upgrade to enable NexusPRO
to Bangladesh.
Brief Detail of How NexusPRO Works
Normal cards use a magnetic strip at the back of the card. The information and
security on that magnetic strip is stationary and does not change. Hence it can be
easily duplicated. But NexusPRO's processor uses its processor to fully digitally lock
all the information. It prevents the information from being copied as the processor
'generates' security codes rather than store it. It is a form of encryption.
But NexusPRO goes even further. Visualize a series of locks and keys. Every lock has
a corresponding key. customer account at DBBL has a digital lock, while your
NexusPRO card is a digital key to access it. When a fraudulent card tries to access
your account, DBBL knows that the correct digital key is not presented and denies
access. Furthermore, DBBL replaces the account lock every second. But because a
genuine NexusPRO card can generate the correct key using the processor, it can
access open the account lock at that very moment. The next instance DBBL
changes the account lock again, and your NexusPRO card has to generate the key
again using its unique processor.
The NexusPRO system also prevents one NexusPRO card from accessing another
NexusPRO card. This is because all processors are unique. All NexusPRO cards
generate keys differently and DBBL is aware of all the differences and knows which
card is which so they can access only their authorized accounts. However this was
just a brief overview how your NexusPRO card works. The detailed workings are
more secure and even more revolutionary.

Mobile ATM Booth

DBBL has put its level of innovation and standard of customer support to a new
height by setting another milestone in the history of banking sector by adding two
units of Mobile ATM booths to its existing ATM network. DBBL has become the first
bank in the country to provide such unique service and convenience to the
customers. The DBBL Mobile ATM Booth, which is outfitted in a custom-made van, is
available anywhere anytime and allow customers to deposit cash / cheque,
withdraw cash, inquire account balance, print mini statement, pay utility bills and to
access all other services offered by a standard ATM.

Mobile Banking
Around 87% of the total population of Bangladesh is un-banked. To bring such a
huge population into the banking channel, DBBL is implementing a system to launch
mobile banking soon. The project is in its final stage now. With this facility any
person having a mobile number will be able to use his number as a bank account. In
this mobile account they will be able to do the following:

19

Cash deposit to any Agent of DBBL

Cash withdrawal from any Agent of DBBL
Cash withdrawal from DBBL ATMs
Funds transfer to another mobile account
Utility bill payment, Tuition fee payment, Air time top-up.
Receive remittance from home and abroad
Salary disbursement
Disbursement of Govt. allowances
Merchant Payment
Balance Inquiry

Automated Teller Machine (ATM)

Customers get various types of services in these ATM booths like:
1. Cash Withdrawal
2. Balance Inquiry
3. PIN change
4. Fund Transfer (within Accounts)
5. Mini Statement
6. Cheque Book Request
7. Statement Request
8. Bill Payment for

DBBL Credit Card

GrameenPhone
CityCell
TeleTalk
Bangla Link
Alico Premium
Electricity Bill etc.

Customers of other Banks can enjoy the DBBL ATM facilities with some conditions.
The Banks connected with DBBL ATMs are:
1.
2.
3.
4.
5.
6.
7.

Southeast Bank
The City Bank
United Commercial Bank
Standard Bank
National Credit & Commerce Bank
Bank Asia
Mercantile Bank

8. Trust Bank
9. Mutual Trust Bank
10.First Security Bank
11.Dhaka Bank
12.AB Bank
13.IFIC Bank
14.Janata Bank
15.Jamuna Bank
16.Eastern Bank
17.Pubali Bank
18.Sonali Bank
In the month of December, 2010
withdrawal from ATMs was 230
amount of withdrawal was Taka

Fast Track
To provide uninterrupted quick and
introduced Fast Tracks
(FT)
in
comprised of several ATMs, Deposit
help desk officers. The customers
or cheque, withdraw cash, pay
has setup 50 FTs within 6 months
of FT are summarized below
1.
2.
3.
4.
5.

Al
m
os
t
1.
74
%
of
tot
al
wit
hd
ra
wa
ls
wa
s
fro
m
AT
Ms

20

the total number of Cash

million and the corresponding
13.20 billion.

faster service, the Bank has

the country. These FTs are
Kiosks and Customer Service
have the facility to deposit cash
utility bills etc at the FT. DBBL
of introducing it. The activities

Cash Withdrawal:
Cash Deposit.
Account Opening
Customer Request Form
Delivery of Captured Card

A list of such services is given below:

a. Customer's request form for Account Transfer
b. Cardholder's Request form for a new Debit Card (MasterCard Debit / Maestro /
Visa Debit/Visa Electron) or Credit Card (MasterCard / Visa)
c. Request form for Replacement of a Card (Debit/Credit) for any of the following
reasons:
d. Request for re-issue of PIN. Re-issue of PIN may be requested by a customer
who have forgotten his PIN or in the fear that his PIN may be compromised to
another person.
e. Request for Account LinkageAuto debit
f. Request form for refund of Cash not dispenses from ATM but account debited.
g. Application form for availing Internet, SMS & Alert facility on bank account

21
Electronic banking for businesses:
Dutch-Bangla Bank offers a complete electronic banking facility for companies
around the clock. Most multi-nationals use this service because it is advanced,
secure and affordable. DBBL creates a custom banking service to suit any business
of any size. The services have a wide range that includes cash flow services,
distribution banking and salary accounts. If a company knows what type of custom
and tailored banking service they need, DBBL can provide it instantly and at
minimal cost (usually free of charge).
DBBL has created Employee Banking program which allows:

Seamless and error free distribution of salaries

Providing emploees with timely salary payments
Lower manpower needed
Reduces cash theft and misapporpriation
Transactions are properly logged for your easy reference
Highly secure way of distributing money
No cash at hand in the office, all cash finally distributed through the largest
ATM network in Bangladesh

Electronic Student Booth (ESB)

This is another innovative banking offered by DBBL. The booths will mainly be
setup
in
educational institution campus or nearby locations. The booths will
contain ATM and deposit kiosks where the customers & students can
withdraw & deposit money and pay tuition fee for the institute. In
addition to these, there are multiple computers with internet connectivity which
can be used by the students for accessing DBBL internet Banking facility.
DBBL has setup its first ESB at Eden Girls' college, Dhaka. Many ESB are in the
pipeline.

Internet Payment Gateway (IPG)

DBBL again has been the first bank in the country to have an Internet Payment
Gateway. With the help of this, any person in home or abroad can do financial
transactions using DBBL's proprietary cards/ MasterCard/ Visa credit. They can
purchase goods and services from e-commerce web sites, called e-merchants
and pay bills online sitting at their office or home using a card.

Call center
Considering the growing number of customers, card holders
&
transactions,
DBBL has setup a Call center. It is a world renowned Cisco hardwarebased call center comprising of all the services a call center can provide, Interactive
Voice Response (IVR) by virtue of which the customer will be able to choose his

22
options using the keypads of a cell phone and listen to the responses related to his
account or card or transactions from the system or though live agent. The
customers can dial at 16216 from any land or mobile phone and go to IVR or Live
agent, and get desired services.

Human Resource Management System & Remittance

Management System
DBBL has developed a number of in-house software for its own requirements.
The Information Technology Division has successfully developed and implemented
two such systems namely Human Resources Management System (HRMS)
and Remittance
Management
Systems
(RMS).
The HRMS
helps
in
maintaining all information of employees of DBBL while RMS helps in managing
and monitoring local and foreign remittances.

Implementation of Multi-factor Authentication for Internet

Banking
DBBL is considering offering some transactions through Internet banking
which were not possible due to security reasons. To cope with world's latest
technology to provide transaction security, DBBL is considering multi-factor
authentication for some of such transactions like Third Party Funds Transfer using
Internet, e-commerce transactions and foreign remittance transfer from
overseas remittance houses to DBBL

Green IT
Dutch-Bangla Bank has always been careful about environment. DBBL has taken
initiatives to make its IT infrastructure as "Green IT". Environment friendly
options like virtualization, power management and proper recycling habits
towards certifying our data centers as "Green" are under our active consideration.

New Data Center and DRS

DBBL has set up its new data center and DRS to accommodate all the above
setups. The DBBL's data center is one of the most sophisticated data centers
of the country equipped with state-of-the art design, security and sophistication.

Internet banking facilities:

Account Summary
The Customer will be able to view the list of Current, Saving, Term Deposit
and Loan accounts with the current balance.

23
Account Details
The Customer can choose a particular account and see the account details
including unclear fund, limit, interest accrued etc.
Account Activity
The customer can see or print his transaction activity in a given account for a
particular period.
Transfer Funds
The customer can transfer funds from one of his accounts to another of his
accounts within the bank.
Pay Bills
The customer can pay his utility bill (like Electricity, WASA, GAS, Telephone,
Mobile, ISP etc.)
Standing Instructions
The customer can setup, modify or delete standing instructions for
transferring fund from one of his account to another account (his account or
3rd party).
Open/Modify Term Deposit
The customer can open a term deposit by transferring funds from one of his
current or savings accounts with the bank. He can also modify the TD and
redeem / part-redeem it.
Loan Repayments
The customer can make payment of the loan installment from his CASA
account.
Statement Request
The customer can make a request for account statement for a required
period. The bank will manually service this request.
Cheque Book Request
The customer can make a request for a Cheque book.
Cheque Status Inquiry
The customer can choose an account and enter the Cheque number for which
the status should be viewed.
Stop Payment Cheque
The customer can mark his Cheque leaf as stop payment.
Interest Rate Inquiry
The customer can query on the interest rates on CASA & Term Deposit
Products.
Foreign Exchange Rate Inquiry
The customer can query on the Foreign Exchange (FX) Rates using this
function.
Refill Pre-Paid Card
The customer can buy a refill number for his pre-paid mobile phone or ISP
link.
Change Password
The customer can change his Internet Banking Password using this function.

24
Additional Internet Banking Features for Corporate Banking
Letter of Credit
The customer can initiate the LC application through Internet Banking.
Bank Guarantee
The customer can initiate the Bank Guarantee through Internet Banking.
Limits Query
The customer can view his Loan Limits and Limits Utilization through Internet
Banking

3.4 Comparative analysis among five banks

For our analytical purpose we pick 5 banks from three different segments. One of
the banks is DBBl which is pioneer in online banking in Bangladesh. From other
local commercial banks in Bangladesh we pick eastern bank limited and Dhaka
bank. From foreign banks we chose Standard Chartered Bank Limited and Sonali
Bank Limited from the public banks.

Number
of ATM
Number
of
branches
Number
of
branches
having
SWIFT
code
Core
banking
software
Phone
banking
SMS
banking
Internet
banking
Various

DBBL

EBL

Dhaka
Bank

Sonali Bank
Limited

24

Standard
Chartered
Bank
Limited
48

1295

74

96

49

54

25

1191

12

23

19

17

31

Flexcube

Oracle
Flexcube
UBS

Flexcube

eBBS

CISCO
System
Flexcube

Flexcube

Flexcube

Flexcube

Flexcube

Flexcube

iBanking

Card

Trans

CARDPRO

eCAPS

22

IVR
O/S WAP

25
cards

Suite(AIX,
Oracle)

Master for
Prepaid
Credit and
Debit Card

Shared
ATM

Tranzware,Com
pass
Plus

Internet banking facilities:

Account
Summary
Account
Details
Account
Activity
Transfer
Funds
Pay Bills
Standing
Instruction
s
Open/Modi
fy Term
Deposit
Loan
Repaymen
ts
Statement
Request
Cheque
Book
Request
Cheque
Status
Inquiry
Stop
Payment
Cheque
Interest

DBBL

EBL

Dhaka
Bank

Sonali
Bank
Limited

Standard
Chartered
Bank
Limited

X
X

26
Rate
Inquiry
Foreign
Exchange
Rate
Inquiry
Refill PrePaid Card

DBBL

EBL

Dhaka
Bank

Sonali
Bank
Limited

Standard
Chartered
Bank
Limited

Cards and others:

Debit card
Credit
card
Visa and
master
card
Travel
card

Others:

Mobile
banking
Fast Track
Electronic
Student
Booth
(ESB)
Internet
Payment
Gateway
(IPG)
Call
center

DDBL

EBL

Dhaka
Bank
Limited

Sonali
Bank
Limited

Standard
Chartered
Bank
Limited

X
X

X
X

27
New Data
Center
and DRS
Green IT
Online
remittanc
e transfer
Employee
banking
program

28
Location of ATM:
Basis of comparison:
Metropolitical areas: Governed by City Corporations, these are the cities of
Bangladesh. Such as:

Dhaka
Chittagong
Khulna
Rajshahi
Shylet
Borishal
Rangpur

DBBL location of ATMs

metropolitan area
municipal area

23%
77%

Municipal areas: Governed by, Municipal

Corporations, these are the towns in Bangladesh.

29
DBBL ATMs in cities
dhaka

chittagong

khulna

rajshahi

shylet

borishal

rangpur

10%
1%
2%

3% 2%

14%

69%

EBL ATM locations

cities

towns

17%

83%

30
DBL ATM locations
cities

towns

13%

SBL ATM locations

cities

towns

22%

88%

Standard chartered ATM locations

cities

towns

4%

96%

78%

31
percentage of ATMs cities to towns
120%
100%
80%
Axis Title

60%
40%
20%
0%
DBBL

SC

EBL

DBL

SBL

32
3.5 Finding and analysis
Private commercial banks
broader E-banking services
Nationalized banks operate
code then foreign and
Private commercial banks
updated banking software
Foreign
banks
operate
area then private and
All of the banks in our
establish more ATM booth
population
density
is

Foreig
n
comm
ercial
banks
and
private
comm
ercial
banks
are
relativ
ely in
a
better
positio
n to
provid
e on
line
bankin
g
service
s.

and foreign banks offer a

then state owned banks.
more branches having SWIFT
private commercial banks.
and foreign banks use more
then nationalized banks.
more ATMs in cities or urban
nationalized banks.
sample tend to have and
in metropolitan areas where
higher.

33

Chapter
04

Problem
s and
Prospec
ts of E
banking
in
Banglad
esh

34
4.1 SWOT analysis
As empirical evidence here a SWOT Analysis can be an effective measure. For
analyzing the performance of the Internet Banking in Bangladesh the following
SWOT Analysis is considered:

Strength

1
2
3
Weakness

35

1
2
Opportunity

1
2
Threat

36

1
2
3
The strengths and weaknesses are the internal factors of the banks in
operation of E- Banking while the opportunities and threats are the external
factors.

4.2 Limitation and Constraint of online banking system

in Bangladesh
Lack of awareness and human capital
E-business is still not very much progressed in Bangladesh. Mass awareness is not
feasible. The country faces problem of developing human-ware. Without preparing
human capital at the level of international standard, we cannot be able to compete
in global market and successful e-business cannot be feasible.

Unsatisfying services and customer relationship

Nationalized commercial banks and specialized banks are lagging behind of on line
banking services. Moreover, customers are not satisfied with the quality of the
services. They are not also very happy with the behavior of the bank personnel.
However, it reveals that e-business especially with the help of on line banking can
manage economy of Bangladesh in a far better way as customer relationship
management increases.

Unavailability of locally produced software

37
Local Banking software should be developed properly and must have greater
accessibility within the country and outside the country. Moreover, to produce
hardware especially computer and its accessories, local entrepreneurs are not
taking any sort of strategic planning.

Erstwhile technology
Bangladesh Bank should adopt latest technology but due to lack of vision they are
adopting old technology i.e. introduction of MICR for Bangladesh Bank automation
procedure. MICR system should be substituted by cheque truncation system.

Numerous problems have been identified from the field survey on line banking
system in Bangladesh. Some of them are in the followings:
Inefficiency and inadequate knowledge of the bank management about
the on line banking.
Lack of proper Strategic plan to gain and retain market share of the
indigenous banks.
Lack of international standard communication channel.
High cost of establishing on line banking system. Inadequate back and
front office management.
Lack of integrated plan among the banks and the Central Bank
authority.
Inefficient Clearing House Facilities.
Inappropriate software and less trust by the Bank authorities on local
software.
Biased-news of the management of bank towards foreign software.
Legal barriers and appropriate policy framework.

Limited number of online customer due to high cost

The number of customers taking banking services does not capable to bear the cost
of additional equipments like computer, computer accessories , Internet etc. from
their own organization or at home. Biometrics should be more strengthened. Using
Internet facility still very costly and people has little knowledge in operating
computers. A few numbers of cyber caf is available but for banking purpose
customers do not feel safe to use these facilities. As a result total numbers of
customers who are habituated in on line banking systems are limited. In these
circumstances investment for establishing e -banking facilities seems profitless.

Financial risks

38
Although on line banking has bright prospects, it involves some financial risks as
well. The major risk of on line banking includes operational risks (e.g. security risks,
system design, implementation and maintenance risks); customer misuse of
products and services risks; legal risks (e.g. without proper legal support, money
laundering may be influenced); strategic risks; reputation risks (e.g. in case the
bank fails to provide secure and trouble free e-banking services, this will cause
reputation risk); credit risks; market risks; and liquidity risks. Therefore,
identification of relevant risks, and formulation and implementation of proper risk
management policies and strategy formulations and implementations are important
for the scheduled banks while performing on line banking system.

4.3 Prospect of e-banking

The Bangladesh Railway owns a high-speed optical fiber network (1,800 km) parallel
to the railway path that covers most of the 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
centres. 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 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 online banking

39
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 governments 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.

40

Chapter
05

Polic
y
impli
catio
n
and
conc
lusio

41
Potential Policy implications
To implement e-business successfully in Bangladesh following recommendations are
given below:

Successful team building and security system

Successful team building with a coherent manner for developing human ware,
hardware, software and web ware are required to increase e-business process in a
systematic way. Moreover, greater emphasis should be given on security system
and to prevent fraud so that any sort of financial transactions including on line
banking payment or any other electronic fund transfer can be properly handled.

Definite career path for hardware and software engineer

Career path of hardware and software engineers should be properly designed.
Otherwise professionals will be de-motivated and they wont work with job
satisfaction.

Adequate research work

Banks and business organizations especially corporate houses should have
adequate research, skilled manpower and technology driven strategies in this
regard.

Initiatives to develop integrated e banking software

Initiatives to develop integrated e banking software through in house built may be
taken. Preference should be given by the bank authority to use local software over
foreign software. Common gateway is required so that interbank transactions can
be feasible. Bank can charge normal profit to enlarge the market size on the on line
banking products. Banks should have their own strategic plans to implement on line
banking system. Creating awareness and consciousness among the clients of the
banks are also required.

Infrastructure development
Internet penetration is a key factor for the growth of e-banking. Christiansen
(2001) reports that the take off phase of Internet banking needs at least 30
percent Internet usage among the population. Moreover, since Internet
penetration alone is not adequate for online banking expansion, the
government may provide subsidy for surfing cost, organize training facilities
with private partnership, widen multiple access facilities like web, telephone,
ATM etc., and initiate motivation programs for the users and the target
population. Moreover, adequate legal framework and security are essential
for flourishing internet banking.

42
VSAT operating license should not limit the bandwidth. Moreover, high
bandwidth charge is another constraint in widening internet access to a
greater number of people. Therefore rationalizing the charge could make the
use of internet affordable to all.
New ISPs should be attracted into the business for promoting greater
competition in the industry.
More high-speed fiber optical data communication infrastructures should be
well established for speedy data communication for domestic and global high
speed communication system. This will help to attain better e-business
including on line banking system. Competitive situation should be arranged
so that e-business management can be improved through efficiency and
effectiveness of customer services.
The policies relating to long distance and international voice traffic need
review to remove impediments to growth of e-commerce that relates ebanking as well.
As a part of building digital Bangladesh, measures are needed to improve
existing ICT infrastructure and address relevant issues including governance
and institutional strengthening.
A package of required rules, acts, laws, and regulations pertinent to ebanking adoption and development may be formulated. In this respect,
lessons and experience of countries that have already expanded e-banking
can act as useful guides.
BTRC as a regulatory body should work with long term vision, mission and
fulfillment of goal oriented strategies. They should work as a facilitator rather
not creating hindrance. VOIP should be legalized after examining and
finalizing proper rules and regulations in the country
The Bangladesh Bank may consider the following steps:
Take steps to orient bank officials on benefits of e-banking. For instance, BB
may offer short courses (e.g. using the Bangladesh Bank Training Academy)
on e-banking including analysis of costs and benefit from the perspectives of
customers and the banks, present status, and opportunities and challenges.
To avoid risks involved in e-banking, risk mitigation policies and strategies
need to be adopted as a part of the package approach to implementing ebanking.
Mobile banking is a prospective area for two reasons: it covers almost all
activities involved in retail banking; and mobile phone network has already
been spread all over the country covering more than 30 million people.
Because of convenience, a sizeable share of the unbanked people can be
brought under the network especially in rural areas with flourishing mobile
banking. In this context, it is important to formulate relevant acts, policies,
and adopt operative guidelines.

43
For the scheduled banks, it is important to:
Review their business strategy and create the required space for adopting ebanking services in order to remain competitive and attract new customers.
Strengthen ICT department through providing training to IT personnel and
procuring required hardware and software.
Create separate unit in each branch for rendering ICT related operational
activities under the supervision of the ICT department.
Train all staff in basic ICT related matters in phases.

Conclusion
Technology has enabled the world to step into a new arena. To keep pace with
advancing world it has become imperative to adapt new technologies in business
and banking sector. At present, Bangladesh is trailing behind in acquiring the
required quality of banking services to effectively compete in the global market.
Therefore, the banking system needs upgrade for which urgent measures are
needed to create a level playing field for rapid expansion of e-banking in the
country. Despite the constraints, more efficient use of existing capabilities in
developing the services can pave the way to quality provision of e-banking in
Bangladesh.

44
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II.

III.
IV.
V.

Muhammad Mahboob Ali (2010). E-Business and on line banking in

Bangladesh: an Analysis. AIUB Bus Econ Working Paper Series, No 2010-03,
Mohammad Azizul Baten, PhD, E-Banking of Economical Prospects in
Bangladesh, Journal of Internet Banking and Commerce, August 2010, vol. 15,
no.2
Md. Abdul Hannan Mia, Mohammad Anisur Rahman, Md. Main Uddin EBanking: Evolution, Status and Prospects
Mohammad Mizanur Rahman, E-Banking in Bangladesh: Some Policy
Implications
Websites of concerned bank