Introduction:

Bangladesh is still lagging behind to avail the opportunity of e-business. However, banking sector

as a whole has been introducing online banking system which plays complementary role to

spread of e-business. Internet has opened a new horizon of e-business, creating immense

opportunities for marketing products as well as managing organizations banking internationally.

Gradually wire-less internet system has been creating a new paradigm and electronic fund

transfer can have a suitable formation. E-business can improve the quality of the services, save

customers valuable time, movement from one place to another and receiving the goods

accurately. E-business brings a new channel of distribution process. But this leads to change in

the regulatory issues, cross border trade through emerging new marketing distribution channel.

This reduces transaction time, boundary less trade, and accuracy. In developed nations, e-

business creates an opportunity to directly selling of the product to the customer without using

any intermediaries. This process occurs mainly in the four systems: businesses to business

(B2B), business to consumer (B2C), business to government (B2G) and consumer to consumer

(C2C).E-business expedite the process of better customer relationship management. It also helps

to attain enterprise resource management as well as “e” to “e” process. As such on line banking

system can add value and value chain can be created in the e-business process. In turn it helps

to raise gross domestic product of the country. Governments as well as different international

organizations have also identified that underdeveloped banking technology creates hindrance on

economic progress of the country. On line banking system is a way of conducting, managing, and

executing banking transactions utilizing information and communication technology (ICT) and

electronic communication networks such as the internet, intranet and extranet. Environment of

electronic banking requires authentication procedures for electronic payment system, network

environment, computer hardware and software, electronic hardware, legal bindings, etc. The

security and authentication of modern banking are very much dependent on cryptography and its

applications. Dilshad Hossain, an Officer of Agrani Bank Limited, argued that many banks have

assumed that internet banking primarily increases information security risks and have not

sufficiently focused on the effect on other banking-specific risks. Risk management disciplines

have not evolved at the same speed and many institutions, especially the smaller ones, have not

been able to incorporate Internet banking risk controls within their existing risk management

structures. As information symmetry and free flow of information is gaining more importance due

to globalization process, Bangladeshi companies have to compete in the world market to serve

corporate and other clients with round the clock services. Access to computer would be beneficial

to Bangladesh like any other country. Social and economic disparity and lack of Internet

accessibility which creates digital divide is a great hindrance towards customer dissatisfaction of

the business organization which ultimately results negative customer relationship management.

As a result it creates negative impact on economic development of the country. E-business

process creates an opportunity for doing business through arranging real time sharing business.

Organizations can take help of transaction process through e-business solutions from around the

world where on line facility can be available. Due to advancement of technology, business

process of the globe is gradually becoming complex for which e-business especially in the

banking sector can supersede the traditional business process. Through e-business the country

can compete with the changing global business trend and on line banking can facilitate e-

business.

Present Status:

Bangladeshi companies, organizations are facing problem to start full swing e-business. Network

is a mode of communications with the computers. Networks of computers can be classified in

following ways: Local area network, Metropolitan area network, and World Wide area network.

Multiple computers connected through telephone lines, cable systems, and in wireless

technology are also required. According to a report published in The Daily Star (4th April, 2010)

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. In

South Asia, India ranked 43rd, Sri Lanka 72nd, Pakistan 87th and Nepal 124th in the ‘Global

Information Technology Report 2009-2010′ released by The World Economic Forum (WEF) on

3rd April, 2010.As such Bangladesh has to go long way to develop its network for arranging

Digital Bangladesh by the year 2021 and public and private cooperation and strategic alliance is

required to develop e-business system in the country.

 Electronic Payment Systems for e- business includes characterized by broad geographic

presence and acceptance by a large number of merchants or programs. Participants in an

electronic payment system may include users, financial institutions, business personnel,

industrialist, merchants’, third party processor etc. WIMAX stands for Worldwide Interoperability

for Microwave Access which offers wireless transmission of data via different transmission

modes, from point-to-multipoint links to portable and fully mobile internet access. The Finance

Minister recently argued at trial launching of operation of the country’s first-ever wireless

broadband technology WIMAX. He commented that entrepreneurs of the telecommunications

sector must reach the digital communications system to the doorsteps of the rural people. He

hoped that the WIMAX technology will be available at every divisional headquarters within a year

(Source: http://www.bangladeshinfo.com/gadgets/news_inner.php?nid=2343, July 22, 2009).

Telephone density is awfully little in Bangladesh. It is far much less in comparison with other

developed nations of the world as well as neighboring countries. Kabir (2008) depicted that

Mobile Phones (millions) are 36.4, Fixed Lines (PSTN) (millions) are 1.2 Total telecom users

(millions) are 37.6, Tele-density (%) is 26.8 in the year 2008. Outside Dhaka, at present a few

computer network infrastructures have been developed so far. Apart from some educational

institutes outside Dhaka, observation finds that most of the LAN setups are Dhaka centric.

Bangladesh has been connected to worldwide Internet Super High Way from 2006 through an

under sea submarine cable. But this single submarine cable frequently faces disruption resulting

in slow bandwidth.

A huge digital divide exists among the city of Dhaka, Chittagong and other parts of the country.

Private-public partnership is a crucial issue for information and communication technology (ICT)

development and application. Private enterprise and capital can lead ICT revolution in

Bangladesh. This, however, would require the government to provide the basic business

environment. Rapid growth in ICT is not possible without massive investments for ICT

infrastructure and human resource development in the computer and electronics and

telecommunication engineering courses through ensuring quality education. Still now call charge

of cell phone is not competitive in Bangladesh. Bangladesh Telecommunication Regulatory

Commission (BTRC) is not playing due role in the development process of communication sector.

Infrastructural problems are creating less scope to successfully implement e-business.

 Under the private initiative, Internet was started in 1996 by ISN in Bangladesh. ISN is the first

ISP operator in this country. Still now all the Internet service providers have the server in abroad,

for which they are facing competitive disadvantage, as cost remains high. Security problem is still

high in this country. Lack of digital accessible personnel is real problem for the country.

Moreover, some software developers of the country aren’t well conversant with the market

demand for which they cannot supply application software with faultlessness.

Policy makers of the country are not aware about the benefits of online banking .As such they

don’t put significance on proper and systematic development of the process of online banking. In

this connection it may be stated that Bangladesh bank is trying to implement automated

clearinghouse through utilizing (Magnetic Ink Character Recognizer) MICR procedure. But in

developed nations MICR procedure is now replaced by more sophisticated procedure such as

cheque truncation process.

Total numbers of Banks in Bangladesh are fifty six. Banking sector in Bangladesh on the basis of

utilization of electronic devices can be subdivided into three groups: i) Foreign Commercial Banks

and Private Commercial banks especially 2nd (except few banks) and 3rd generation Private

Banks: Fully Online banking; ii) 1st generation private banks and some 2nd generation Private

Commercial Banks: Medium range Online banking system ;iii) 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 online banking facilities. 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, online banking etc. services.

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),

Agrani 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 banking

facilities. All of these private banks offering limited online 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.  They 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. Agrani bank ltd. is also

providing online banking services in a wide 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. Detail types of banking services offered by various banks are

given in appendix.

A broad spectrum of internet banking services, a subset of electronic finance, is available in

Bangladesh with different degree of penetration. The credit card is available from VISA, Master

Card and VANIK. Some commercial 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.

Last couple of years shows dramatic improvement in the awareness situation in the banking

sector regarding the comprehensive application of ICT. 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. Those products would be very useful for export-

oriented industry to reduce lead-time in export and keep comparative advantage in the

international market.

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 5 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 m-Remittance system.

According to a Ahemd (15th April, 2010) in a revolutionary step on April 13, 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 country’s second largest mobile

operator, Banglalink.

Credit card facility fully can not be extended in the country, as common gateway between

financial institutions can not 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’.

To eradicate digital divide process has been started very slowly. Bogora, Kushtia, Barisal and

Modhupur village of Tangil was bringing under preview of internet banking is a complete virtual

bank which started on 2nd May of 2000. This will gradually give following services: e-marketing,

e-shopping mall, e-marriage scheme, e-mail, e-tender, evoking / polling, search engine, chat, e-

commerce, e-stamp, e-cash, e-music, e-entertainment, e-treatment, e-advocacy etc. E-

governance can help us to achieve good governance of the country.

If Govt. doesn’t take proper incentives to spread the computerization process then there will be

no benefit. The parliamentary members of the country must be aware of the benefits of

Information and Communication Technology (ICT), otherwise it can not be successful. It won’t

bring any dramatic changes in the economy. Entrepreneurship Development Fund (EDF) of

Bangladesh Bank is should be utilized properly. Only a few companies can avail the fund. ICT

related companies are trying to develop e-business processes but their activities are limited. If

proper procedure of e-business can be developed in the agri-business sector especially in the

rural areas through utilizing e-technology then it will be beneficial for the producers of the

agricultural commodities.

Acute shortages of human resources interested to do online banking business are also one of the

main reasons for lagging behind. However, as law and order situation is deteriorating so there is

a positive impact on the online banking considering the safety of the people.

From the field visit, it reveals that banking sector requires rapid modification and adaptation to

keep harmony with the world business. It becomes more obvious by observing the increased

number of customers in some modern banks while others are losing them. In the context of

Bangladesh, a country of more than 150 million people, it is to be realized that there is no other

option for us than to join the current trend

According to news report published in the new Nation on 28th August 2009 the government has

formulated a policy on the national information and communication technology as part of its

announced plan for digitization of the nation. The policy has earmarked activities in three phases

in the short, medium and long-term plans to be implemented within 2021.The government aims at

doubling the Gross Domestic Products (GDP) during this time to achieve the goal. The policy

details suggest a number of activities including spreading the use of keyboard by functionaries at

different levels, encouraging the use of standard code by software sellers, developing a national

web-portal and popularizing the use of e- citizen services, paying service charge through mobile

phones or ticketing etc. Land registration, passport renewal, digitization of police case dairy and

case position in the court, spreading the use of broadband internet throughout the country and

such other essential services may also be brought under the scheme. The new policy will be the

common property of all departments and organs of the state targeted to develop a digitized

nation within the stipulated time.

Most of the existing banking system in the country outside Dhaka and Chittagong city is manual

(paper based) that’s why is awkward, slow and error-prone. It, in one hand, fails to meet the

customers’ demand and, on the other hand, it causes some significant losses both for the

banking authority and traders. Electronic banking, on the other hand, solves the above problems.

Furthermore, it opens up some other salient aspects such as increased foreign trade and foreign

investment. At present weekly bank holiday in Bangladesh is in Friday and Saturday where as in

rest of the world it is in Sunday. As such Bangladesh has only 4 banking days for foreign

exchange transactions. With preliminary stage e- business facilities and this limited time period

(banks’ transaction days) how long we can survive- is a debate. Bangladesh government should

consider this case carefully.

According to a report on “Bangladesh is developing electronic payment infrastructure” (May

20,2008) the Securities and Exchange Commission (SEC) in Bangladesh proposed IT

Consultants Limited (ITC), a manager of Q-cash brand of ATM and different cards, to raise their

paid-up capital up to Tk 500 million if the company is to proceed to initial public offerings. The

Securities and Exchange Commission (SEC) has asked us to raise the company’s paid-up capital

Tk 50 crore from the current Tk 37 crore. In case the company fails to comply with the SEC

requirements to increase the paid-up capital within the time specified, it will have to gain the

approval of the SEC again. This measure is believed to extend the sphere of the company’s

influence. The company began as a private limited business in 2001. But now it is the local leader

in electronic payment systems which are developing in the country with increased speed. ITC

possesses necessary tools to process transactions for banks and retailers. It has the largest

independent network of more than 100 ATMs in the country. There is also a wide network of

point-of-sales (POS) centers operated by the company. (Source: http://www.ecommercejournal.

com/news/bangladesh_is_developing_electronic_payment_infrastructure_0?drgn=1)

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.

The country had only about 400,000 credit card holders at the end of June last year, according to

Bangladesh Bank Payments and transactions by credit cards were nearly Tk11 billion in June

2008 — one of the lowest in the world. However, banks still need massive ICT backbone to

ensure that online transaction can not be misused. Meanwhile, Bangladesh bank started

Automated Clearing House on trail basis from 8th November, 2009.Bangladesh Bank also

declared that the clearing house won’t accept any cheque from 1st April 2010 if size of the

cheque is not as per the guideline of the MICR system. However, 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.

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 centers. 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 in2006. 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 56kbps 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 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 tale-banking and some are electronic fund

transfer, debit card, credit card etc.

Recently, the government’s emphasis on building a digital Bangladesh, setting up ICT park,

raising allocation for developing ICT infrastructure, waiving taxes on computer peripherals and

other measures including the automation program of banking sector led by the Bangladesh Bank

and competition among the scheduled banks in improving customer services have accelerated

the prospects of e-banking in Bangladesh

The Background of Online Banking Systems in the Financial Institutions:

First Stage Machine:

At first, National City Bank of Newyork started effectively electronic transferable deposit certificate

in 1961. Through this technology Banks purchased fund & solved liability system. Electronic Fund

Transfer (EFT) system is the first step of Electronic Banking System. The main elements of EFT

are Automated Teller Machine (ATM), Point of Sale (PST) &Automated Clearing House (ACHs).

The bank of “Barclays” was situated on June, 1967. The working system of this machine is

different from that of present machine. Bank gave voucher to her customers & entering into

machine of that voucher & came out pound. But the voucher stayed into machine. After some

days, Bank provided plastic card instead of paper voucher. The customers made transaction

entering into machine of the provided card. After making every transaction, the card stayed into

machine. Bank sent the card of the customer by postage so that the customer could use again.

After one year, Sweden, Franch & Switzerland started “National Cash Dispenser Network. In

1969, Japan & America started their own produced machine. At first it was off-line machine. It

was not connected to banking computer.

Second Stage Machine:

In 1972, “Lioyd’s Bank” of UK established online “Cash Point” machine. They provided card to

their customers. It was established Magnetic Stripe on the card. As a result, customer or account

number was identified easily. Through this online technology, each machine was connected to

central computer of the bank. If the machine was not connected to the central computer, it did not

work. Through this online system the customers were returned of the Magnetic Stripe card after

transaction for next time used.

Present Stage Machine:  

During thirty years research, the present machines are invented. The present machines are “Full

Graphics Screen Monitor” like color computer & is made transaction different currency through

the decreasing with developing of technology. The present price of a machine is about 50-60 lac

taka.  The machine is found in each developed & under developed countries. The highest market

of the machines is Asia & the least market is Africa.

The last ten years of twenty century is electronic banking age. But it has started in Bangladesh

primarily. Now-a-days in developed countries, it is started “Virtual Banking System (VBS). VBS

means “No Man Banks”.

E banking:

The term Internet Banking or E-Banking or both are used as supplement. E-Banking 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 (WWW). 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, 2002). 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 MultiMate, 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 an accessory

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. Abul Kashem Md. Shirin & Nusrat Tahmina

Prianka have written in their book, Information Technology in Financial Services (The Institute of

Bankers, Bangladesh-IBB) that Internet banking is also known as i-banking or online banking.

Internet banking is a system which the customers can access from his home, office or anywhere

in the world through internet. To avail this service, the customer needs to get an user ID &

password from his bank & he needs to have access to a computer with internet.

Online Banking or Internet Banking or E-Banking allows customers of a financial institution to

conduct financial transactions on a secure website operated by the institution, which can be a

retail or virtual bank, credit union or building society. It may include of any transactions related to

online usage.

To access a financial institution’s online banking facility, a customer having personal internet

access must register with the institution for the service & set up some password (under various

names) for customer verification. The password for online banking is normally not the same as for

telephone banking. Financial institutions now routinely allocate customer numbers (also under

various names), whether or not customers intend to access their online banking facility. Customer

numbers are normally not the same as account numbers, become a number of accounts can be

linked to the one customer. The customer will link to the customer number any of those accounts

which the customer controls, which may be cheque, savings, loan, credit card & other accounts.

To access online banking, the customer would go to the financial institution’s website, and enter

the online banking facility using the customer number & password. Some financial institutions

have set up additional security steps for access, but there is no consistency to the approach

adopted.

Internet Banking in Bangladesh:

Internet Banking is growing popular day by day in Bangladesh. A number of private as well as

local banks are going online now considering the demand and necessity of fast banking. Internet

banking not only provides banking facility round the clock but also helps a country to get attached

to the international economy as well as business. People throughout the world are now getting

engaged with more activity and business and hence need the fast and anytime access to his/her

bank account. Internet banking also facilitates buying and selling various products which varies

country to country.

In Bangladesh many banks have launched Internet Banking. Amongst those HSBC, City Bank,

BRAC Bank, Bank Asia, Jamuna Bank, Janata Bank, Southeast Bank, AB Bank, First Security

Bank, Mercantile Bank, Premier Bank, Agrani Bank Limited etc are in action already. Some are

known as online banking, some are Internet Banking, providing various facilities. Like City Bank

has the facility of account check and statement print including query about cheque book

information. Bank Asia has almost same facilities but with addition they have internal fund

transfer facility along with bill payment and mobile phone recharge which are, in fact quite handy.

Mercantile bank has a schedule for internet banking. It is Sunday to Thursday, 9am-3pm. They

have the facility of money transaction, deposit and withdrawal though they charge a particular

amount for each transaction according to their policy, it is a relief if you don’t have to go to bank

for depositing and drawing money, isn’t it?

HSBC and BRAC Bank are clearly not satisfied with the transaction thing only in internet banking.

They thought of something more and desiring and customized the service to its best for their

clients and getting better day by day. HSBC has a whole lot of features in their online banking

that includes 24/7 account access, loan account information, net- worth information, transaction

amongst accounts, bill pay, personal information update, demand draft,  ATM info or PIN

replacement request, cheque book order and lot more.

BRAC bank is one step ahead because for the first time they have introduced online shopping in

Bangladesh. With exclusive features and facility BRAC bank also provides general online facility

like the other banks. BRAC bank’s online shopping facilitates merchants to buy any product as

they need online, they can customize the offers as well. Those who may have BRAC Bank VISA

card or any VISA card can be a part of this online shopping service.

As the world economy is growing faster and banking sector is making mark each and every day,

online banking is very important and effective to be a part of it. Bangladesh just started its journey

in internet banking and banks are coming forward to make it a success. Online banking is clearly

a huge benefit for the customers and saves a lot of time and things get done so easily. A

developing country like Bangladesh can make the best out of Internet Banking and banks are

completely into it.

Online Banking Solution “TEMENOS T24″ launched in Agrani Bank Limited:

Agrani Bank Limited launched “TEMENOS T24″ Online Banking Solution on Sunday evening,

13th February 2011 at The Westin Dhaka. Dr. Atiur Rahman, Governor of Bangladesh Bank was

present as the Chief Guest and Dr. Khondoker Bazlul Hoque, Chairman of Agrani Bank Limited

was the Special Guest of the launching ceremony. Syed Abdul Hamid, Managing Director & CEO

of Agrani Bank Limited, and Mr. Mustafa Rafiqul Islam, Chairman & Managing Director of Flora

Telecom Limited along with other high officials from reputed banks in the country were present in

the ceremony. Senior Officials from Agrani Bank Limited, Flora Telecom Limited and Temenos

were also present.

Company History of T-24:

Founded in 1993 and listed on the Swiss Stock Exchange (SIX: TEMN), Temenos Group AG is

the market leading provider of banking software systems to retail, corporate, universal, private,

Islamic, microfinance and community banks, wealth managers, and financial institutions.

Headquartered in Geneva and with more than 55 offices worldwide, Temenos is proven in over

1,500 customer deployments in more than 125 countries across the world.

According to IBS Intelligence, which maintains an annual league table, TEMENOS T24 has been

the first or second bestselling core banking solution for the last 14 years. Forrester ranks

Temenos as the sole global power seller (Global Banking Platform Deals 2011), and Temenos

has been the winner every year since its launch of the Best Core Banking Product in Banking

Technology magazine’s Readers’ Choice Awards.

Temenos customers are proven to be more profitable than their peers: in the period 2008-2010,

Temenos customers enjoyed on average a 30% higher return on assets, a 46% higher return on

capital and an 8.5 percentage point lower cost/income ratio than banks running legacy

applications.

Function of online banking in ABL

The customers can perform almost all types of banking activities through online banking from any

branch.

(1)   Account Summary: The customer will be able to view the list of current, savings, term

deposit & retail loan accounts held & the current balances in each account in the account

currency. An indicative valuation of the account balances can be performed in the customer’s

preferred currency.

(2)   Account Details: The customer can choose a particular account (savings, checking account,

term deposit or loan account) & see the account details such as date of opening, date of maturity,

outstanding balance, interest accrued, interest paid, limit amount etc.

(3)   Account Activity: The customer can see transaction activity in a given account for a range of

dates specified by the customer.

(4)   Transfer Funds: The customer can transfer funds from his one account to his another

account with the bank.

(5)   Open Term Deposit (TD): The customer can modify a term deposit by transferring funds from

one of his current or savings accounts with the bank.

(6)   Modify Term Deposit: The customer can modify the maturity & interest instruction details of

the existing term deposit accounts.

(7)   Close Term Deposit: The customer can close a TD account prematurely in part or in full. He

will be shown the penalty applicable as per the product definition.

(8)   Loans Repayment: The customer can make payment of the loan instalement or any amount

by specifying the amount. The amount will be transferred from his deposit account.

(9)   Early & Final Settlement: The customer can make an early payment of the entire loan

amount due. The amount will be transferred from his deposit account.

(10)Standing Instruction: The customer can set up standing instructions for transferring a fixed

amount of funds from his deposit account to another deposit (self or third party) or loan account

in the bank in a fixed date of every week/month/quarter/year. He can specify the start date & the

final date for execution of the standing instruction. The users can set up multiple instructions for

each account & define the priority in which they can be executed. The instructions can be set up

for one-time transfer or recurring transfers at a predefine frequency.

(11) Payee Maintenance: The customer can set up templates for use in “Third Party Fund

Transfer” mentioning account number & other details of the “Third Party”. The Third Party means

an individual who has account with the same bank. However an educational institute or utility

company is not a “Third Party”. To be effective & available in the list during the “Third Party

Transfers”, such entries need to be approved by a bank officer.

(12)  Third Party Transfers: The customer can transfer funds from one of his accounts to another

“Third Party” account within the bank. The Third Party account must be pre-recorded in the

system using ‘Payee Maintenance’ and authorized by a Bank Officer for making this available in

the list.

(13) Statement Request: The customer can make a request for account statement for a required

period. The bank will manually service this request.

(14)Cheque Book Request: The customer can make a request for a cheque book for an account

choosing the number of leaves desired from the set that the bank officer.

(15)Stop Cheque Request: The customer can choose an account & enter the cheque

number/range of cheque for which the cheque encashment should be stopped. He can also

specify the reason for stopping the encashment.

(16)Cheque Status Inquiry: The customer can choose an account & enter the cheque number for

which the status should be viewed. In case the cheque is returned or stopped, the reason for

rejection will also be shown.

(17) FX Rates Inquiry: The customer can query on the FX rates that the bank officers using

function. The rates displayed are the TT, cash & DD rates.

(18) Interest Rates Inquiry: The customer can query on the interest rates offered on savings &

term deposit products offered by the bank.

(19) Change Password: The customer can voluntarily change the internet password using this

function. In addition the user is forced to change the password by the system at first Logon &

defined intervals. In both cases the password needs to confirm to the policy defined by the bank.

Online-banking Product Available in ABL:

Online banking product and services can include wholesale products for corporate customers as

well as retail and fiduciary products for individual customers. Ultimately the product and services

obtained through internet banking may mirror product and services offered through other bank

delivery channels. A brief description of e-banking products is described below:

Automated teller machine:

An automated teller machine (ATM) is a computerized telecommunication device that provides a

financial institution’s customers with a method of financial transaction in a public space without a

need for a human clerk or a bank teller.

Debit card:

A debit card is a plastic card which provides an alternative payment method to cash. While

making purchases the amount of a transaction is typically displayed on a card reader, after which

the customer swipes the card and enters the pin number. There is usually a short delay while the

EFTPOS (electronic fund transfer at point of sale) terminal contact the computer network (over a

phone line and mobile connection) to verify the authorize the transaction.

Credit card:

A credit card is a system of payment named after the small plastic card issued to users of the

system. A credit card is different from a debit card in that it does not remove money from the

user’s 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 can not be extended in the country, as common gateway between

financial institutions can not 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 doesn’t 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.

Check Truncation:

This is such a service in which a financial institution doesn’t 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.

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 inter-bank payment service)SWIFT

( the society for worldwide inter-bank 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 m-Remittance 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 15 service for Bangladesh was jointly launched by

two local banks Dhaka Bank ltd. and Eastern Bank ltd. and the country’s 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. Other Online 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, Master Card and VANIK.

Agrani Bank limited provides electronic fund transfer (EFT) services. It is at an early stage and

used on a very limited scale. Micro chips 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.