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1
Surma Tower, Sylhet
An Assignment on
Use of technologies in the banking sector of Bangladesh
Course title: Technology an...
2
Executive summary
Among the financial service industry, the banking sector was one of the first to
embrace rapid globali...
3
AcknowledgementAcknowledgementAcknowledgementAcknowledgement
At first, we are grateful to Almighty Allah for creating us...
4
Contents
Subjects pages
1. Introduction 5
2. Objectives of the Assignment 6
3. Rationale of the report 6
4. Limitations ...
5
Introduction:
For over a decade, the rapid advancement in information and communication
Technology has significantly aff...
6
As part of our internship program we the members of the assignment group
have worked in Pubali Bank Limited, Prime Bank ...
7
In addition, use of Technology banking could reduce operating costs for banks. More
broadly, the continued development o...
8
Special Services: Some Banks render special services to the customers attracting
other banks.
Any Branch Banking: Any br...
9
Home Banking: Home banking frees customers of physical branches and most
transactions will be automated to enable them t...
10
The lists of services are given bellow:
Grameen post-paid cell phone bills only
Robi post-paid cell phone bills only
Ba...
11
other free format messages to and from any banks active in the network. Having
SWIFT facility, Bank will be able to ser...
12
4. Statement request through ATM/Debit/Credit Card
5. Transfer own funds to other account number in same bank
6. Presen...
13
banking have a dual role to the customer. They provide traditional banking services,
but additional offer much greater ...
14
office management. Lack of integrated plan among the banks and the Central
Bank authority.
4) Inefficient clearing hous...
15
Recommendations:
The recommendations of this study are mentioned below. For the scheduled banks, it
is important to: Re...
16
Conclusion:
This assignment is a descriptive study where the main purpose was to highlight the
present status, future p...
17
References:
1. Ahmed, Feroz and Islam, Md.Tarikul (2008). “E-Banking: Performance, Problems
and Potentials in Banglades...
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Use of technologies in the banking sector of Bangladesh

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Among the financial service industry, the banking sector was one of the first to embrace rapid globalization and benefits significantly from technology development. The technological revolution in banking started in the 1950s, with the installation of the first automated bookkeeping machines at banks. This was well before the other industries became tech savvy. The first Automated Teller Machine (ATM) is reported to have been introduced in the USA in 1968 with only a cash dispenser. Automation in banking have become widespread over the past few decades as banks quickly realized that much of their labor intensive information-handling processes could be automated the use of computers. Against this background the paper examines the Technology driven banking services reference to the present and future of Technology driven banking in Bangladesh.

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Use of technologies in the banking sector of Bangladesh

  1. 1. 1 Surma Tower, Sylhet An Assignment on Use of technologies in the banking sector of Bangladesh Course title: Technology and Innovation Management Course code: TIM-533 Submitted to: Prof.Dr.Bashir Ahmed Bhuiyan Professor Department of Business Administration Leading University, Sylhet Prepared by: Torch Bearers ID Name 1611017014 Mahmudul Hasan 1611017047 Romana Begum 1611017049 Farhana Jahan Liza 1611017051 Tahfim Ahmed Chowdhury 1611017008 Md.Yeasir Arafath 1611017021 Masum Hussain Section: C Semester: 3rd Program: MBA Department of Business Administration Leading University, Sylhet Date of Submission: 2 May, 2016
  2. 2. 2 Executive summary Among the financial service industry, the banking sector was one of the first to embrace rapid globalization and benefits significantly from technology development. The technological revolution in banking started in the 1950s, with the installation of the first automated bookkeeping machines at banks. This was well before the other industries became tech savvy. The first Automated Teller Machine (ATM) is reported to have been introduced in the USA in 1968 with only a cash dispenser. Automation in banking have become widespread over the past few decades as banks quickly realized that much of their labor intensive information-handling processes could be automated the use of computers. Against this background the paper examines the Technology driven banking services reference to the present and future of Technology driven banking in Bangladesh. Presently banks are thinking to offer door-to-door services, 24 hours banking services Technology, pay and cash management through internet services. Moreover, to introduce intensive banking of the multinational banks in Bangladesh. Customer always demands better services, security and round the clock banking. Multinational banks are considering customers needs and demand in the first line of preference. Moreover, trying to offer and introduce the demanded services by the Bank and changing their offering based on the needs of present and potential customers. Up to date banking has unbelievable tools to encourage and give confidence to their customers. In the customers viewpoint, things is to be very easier that is why, they buy the product or take the service, which is newly incepted. Electronic banking is one that such product which helps the customer to prompt thinking and can able to get cash any time within the 24 hours day schedule in a day. Technology has not been a smooth sailing for banks keen to jump onto the technology bandwagon. There have been impediments in the path like the obduracy once shown by trade unions who felt that technology could turn out to be a threat to secure employment, further. The banks face difficulties to expand technologies branch networks in remote areas due to lack of facility of technologies. Another challenge the banks have had to face corners the inability of using technology of banks to retain the trained and talented personnel, especially those who have a good knowledge in technology. The tech based banking products can be made more cost effective to make them more attractive to mass people. If the mass people can avail these banking services then the profit of the banks will increase from volume rather than single transaction. The management of the private commercial banks and nationalized commercial banks might allocate a part of their yearly profit for ICT penetration in banking activities and human resources development. They may also extend those services to the rural people of Bangladesh so that the rural people can also get the benefit of technology driven banking. Therefore, the banking system needs upgradation and urgent measures are needed to create a level playing field for rapid expansion of technology driven banking in the country. Despite all constraints, efficient use of existing facilities can improve the recent condition of technology driven banking in Bangladesh.
  3. 3. 3 AcknowledgementAcknowledgementAcknowledgementAcknowledgement At first, we are grateful to Almighty Allah for creating us in such a beautiful country like Bangladesh and also for controlling our life. For the mercy of Him, we have got such courage to start this assignment on Use of technologies in the banking sector of Bangladesh After that we would like to give thanks to our honorable Head of the Department Prof.Prof.Prof.Prof. Dr. TofayelDr. TofayelDr. TofayelDr. Tofayel AhmedAhmedAhmedAhmed for giving us the opportunity to study in this subject. We would like to express our thanks to the librarian of Leading University for all his help that we have received. Our respected parents who gave us mental support and inspiration for our assignment, there is a special thanks for them. We also would like to give a lot of thanks to our honorable course teacher, Prof.Dr.Bashir Ahmed Bhuiyan for giving us a wonderful opportunity to make such an interesting and valuable assignment and giving us a clear concept about the assignment. At last but not the least, without the help of our friends and classmates it was quite impossible to prepare such kind of assignment. They gave us some necessary information about this topic which was unknown to us. So, we would like to give thanks to all of them.
  4. 4. 4 Contents Subjects pages 1. Introduction 5 2. Objectives of the Assignment 6 3. Rationale of the report 6 4. Limitations of the assignment 6 5. Development & use of Technology 6 6. E-banking 7 7. Use of Technology facilities 7 8. Technology Driven Banking in Bangladesh 8 9. Real-time fund transfer 9 10. Real-time utility bill payments 9 11. View FDR and deposit scheme information 10 12. SWIFT 10 13. Easy Pay Machine 11 14. Use of technology in Banking and their performance 11 15. Benefits of Technology use in banks 12 16. Impact of technology on Banking System 12 17. Impact of technology on Privacy 13 18. The challenges for technology driven banking 13 19. Findings 14 20. Recommendations 15 21. Conclusion 16 22. References 17
  5. 5. 5 Introduction: For over a decade, the rapid advancement in information and communication Technology has significantly affected the banking industry. Banks and other financial institutions have improved their services as financial intermediary through adopting various Information Technologies. Technology has become a tool that facilitates technology banks' organizational structures, business strategies, customer services and related functions. The recent "Information Technology revolution" has exerted far- reaching impact on economics, in general, and the financial service industry, in particular. Within the financial service industry, the banking sector was one of the first to embrace rapid globalization and benefits significantly from technology development. The technological revolution in banking started in the 1950s, with the installation of the first automated bookkeeping machines at banks. This was well before the other industries became tech savvy. The first Automated Teller Machine (ATM) is reported to have been introduced in the USA in 1968 with only a cash dispenser. Automation in banking have become widespread over the past few decades as banks quickly realized that much of their labor intensive information-handling processes could be automated the use of computers. Against this background the paper examines the Technology driven banking services reference to the present and future of Technology driven banking in Bangladesh. In Bangladesh, Banking industry is mature to a great extent than earlier period. Technology has developed superb image in their various activities including Technology in banking. Now modern banking services have launched by some multinationals and new local private commercial banks. Technology in banking is one of the most demanded factors in banking sector. Through this assignment we have tried to describe the use of different Technology in banking sectors from our internship experience of graduation we have tried to unearth the present status of Technology in banking in banking sector in Bangladesh. In Bangladesh, multinational banks are operating for long besides our nationalized, private and specialized banks. However, much of the resulting research has concentrated on providing evidence of the association between consumers’ usage patterns of ATMs and their demographic profiles and, more recently, consumer psychographic profiles. Besides, the banking services of nationalized, private, and multinationals are different by quality technology of their services. Multinational banks are offering better services than others. They offer better customer services, personal financial services, corporate facilities, trade services with the help of efficient operational department, credit department, information Technology department and the most important department is the marketing department. Presently they are thinking to offer door-to-door services, 24 hours banking services Technology, pay and cash management through internet services. Moreover, to introduce intensive banking of the multinational banks in Bangladesh. Customer always demands better services, security and round the clock banking. Multinational banks are considering customers needs and demand in the first line of preference. Moreover, trying to offer and introduce the demanded services by the Bank and changing their offering based on the needs of present and potential customers. Only a few studies regardless of research context have been conducted which focus on the attributes of innovations, as perceived by potential users this assignment tries to highlight the present condition Technology of Technology in banking in Bangladesh.
  6. 6. 6 As part of our internship program we the members of the assignment group have worked in Pubali Bank Limited, Prime Bank Limited, Dutch Bangla Bank Limited, Brac Bank Limited& Dhaka Bank Limited. This report describes the knowledge we have gathered from our internship. Objectives of the Study: This report has taken into consideration to accomplish the following objectives:- 1. To unearth the development of e-banking in Bangladeshi banking sector 2. To explore the Structure of use of Technology banking in Bangladesh 3. To explore the use of Technology services offered by various bank in Bangladesh 4. To find out the common features of use of Technology banking in Bangladesh Rationale of the report: Today’s world is service oriented in every sector. Those who are giving much more services rather than others are giving; he will be well ahead of competition because of getting better competitive advantages. There are 53 different banks working together in Bangladesh. The competition is going up day by day by giving better services and they are trying to develop their own services every now and then. Use of Technology banking is known to us since 1990.Technology in banking has got tremendous importance in banking sector and banking customer as well. This is why; technology is a lucrative issue to talk about. Limitations of the assignment: We have designed the study majorly based on our experience with the bank during our internship program, by understanding the 6 banks Technology use we have tried to draw a bigger picture of the whole banking sectors. We also have collected much information from the secondary data, which may have some mistakes & may miss situations as banking is dynamic sector. Development & use of Technology in Bangladeshi banking sector of Bangladesh: Use of Technology Banking is transforming the financial services industry through various impossible innovations. The quantity of cross-border trading and other financial activities is increasing geometrically make possible by Technology. Technology has been made possible by Technology, particularly information Technology to generate, collect and process information about bank operation and bank customers efficiently and effectively. Technology provides the ability to create more effective systems of controls in individual institutions and in the market themselves. Compared to the paper based operation, Use of Technology Banking Systems, in Technologies most proficient form, offer instant verification and transfer and reduces the flow of costly paper in the record keeping process. Application of technology in banking offer opportunity Technology for reduction of both paper and people. Banks have developed EBS for three main reasons. 1. To protect and increase market share 2. To reduce operating cost by subtracting physical capitalizing and Technology for labor 3. To generate new revenue use of technology banking allow banks to expand their markets for trade & deposits taking and credit extension activities & to offer new products and services or strengthen their competitiveness by positioning in offering existing payment services.
  7. 7. 7 In addition, use of Technology banking could reduce operating costs for banks. More broadly, the continued development of use of Technology banking and use of Technology money may contribute to improving the efficiency of the banking and payment system and to reducing the cost of retail transactions nationally and internationally. Although many financial instrument and systems are now considered as “Use of Technology Banking” came into the terminology of the financial world in the late 1980s, with the possibilities of emergence of true use of Technology money. All sorts of back-office information management Technology and financial services using use of Technology devices can be included into the term “Use of Technology Banking”. The development in information Technology has contributed to economic growth through several channels. ICT has led to a productivity growth through the impact on active processes. Banks have been increasing their own size and financial strength and expanding the scope of their products lines to meet the growing demand of on-line real-time financial services. E-banking: It is a general term referring to various computer-based technologies for delivering banking services. Use of Technology banking systems can be divided into two categories by the functional characteristics, back-office use of Technology banking, and use of Technology financial instruments or front-office use of Technology services. Back-office use of Technology banking provides information management services, and quick fund transfer facilities both for traditional banking and financial instruments and use of Technology financial instruments. Science inception of primary forms of use of Technology banking Technology has been passed through a comprehensive evolution process. Use of Technology banking services can be grouped into three generations of evolution: Categorization of use of Technology banking services First Generation: use of Technology banking back-office Front-office first generation Ledger Cash management, MIS Cash dispensers. Second generation: Transaction Processing[offline] ACHs Generation of information for record keeping ,Fund transfer, Telephone bill payment, POS systems, Check verification, ATMs Authorization. Third generation: On-line transaction processing, Centralized processing at country level, Internet banking, Interbank transaction processing, Automatic Fund Transfers, On-line Banking Home Banking use of Technology, Direct Deposits, Check Truncation, Lock Box, Check Truncation Use of Technology Fund Transfer Internet Banking Source. Use of Technology facilities by our internship providing bank & other different banks in Bangladesh: The following Use of Technologies are providing by different Foreign and Private Commercial banks (PCBs) in Bangladesh. Bank accounts: Savings, Current, FDR, PDS, Term Deposit Scheme all these accounts are maintained in using technology for the sake of customer satisfaction in Bangladesh. People can deposit their money through use of tech devices and also can withdraw their money using such way. These are the common bank accounts which maintained by the bank customer every now and then and bank is also given high priority in this regards to their customer.
  8. 8. 8 Special Services: Some Banks render special services to the customers attracting other banks. Any Branch Banking: Any branch banking is the service where an account is accessible from any branch of a particular bank. In Bangladesh the term is widely popularized as online banking Core Banking: Core banking is a general term used to describe the services provided by a group of networked bank branches. Bank customers may access their funds and other simple transactions from any of the member branch offices. Internet Banking the Internet Banking provides a secure medium for transferring funds electronically between bank accounts and also for making banking transaction over the Internet. Mobile Banking Mobile banking involves the access to, and provision of, banking and financial services through mobile devices. SMS Banking Short Message Service (SMS) is the formal name for text messaging. SMS banking allows customers to make simple transactions to their bank accounts by sending and receiving text messages. Electronic Funds Transfer Electronic Funds Transfer (EFT) is a system of transferring money from one bank account to another without any direct paper money transaction. Any Branch Banking Any branch banking is the service where an account is accessible from any branch of a particular bank. In Bangladesh the term is widely popularized as online banking. Automated Teller Machine (ATM) ATM means computerized machine that permits bank customers to gain access to their accounts and permit them to conduct some limited scale banking transactions with a magnetically encoded plastic card and a code number. Point of Sale (POS) Point of Sale (POS) service is an innovative electronic money transferring system that allows the customers of banks to pay for their purchases through their ATM and credit card at any POS enabled retailer. Technology Driven Banking in Bangladesh: Present Status, Future Prospects and Challenges Credit & Debit Cards: Cards are linked directly to the bank account of its holder. The holder of debit card can use it to buy goods or withdraw cash and the amount is taken from the bank account right away. Credit Cards A credit card is a form of borrowing. Credit cards allow its holder to 'buy goods now and pay later' - called 'buying on credit'. They aren't linked to the bank account of the customers. MICR: MICR (Magnetic Ink Character Recognition) is a character recognition technology adopted mainly by the banking industry to facilitate the processing of cheque. KIOSK: KIOSK Banking offers customers the flexibility to conduct their banking transactions via the KIOSK machine. The customer must have a Debit Card and a PIN. When one inserts the debit Card into the Kiosk, he/she will be prompted to enter the PIN. He/she can then begin using KIOSK Banking. Internet Banking: Customers need an Internet access service to handle this type of banking. As an Internet Banking customer, he/she will be given a specific user ID and a confidential/secret or secured password so that they can access to their own account. Here customer can able to see the ledger balances, transfer his money, request something towards bank, etc.
  9. 9. 9 Home Banking: Home banking frees customers of physical branches and most transactions will be automated to enable them to check their account activities transfer fund and to open L/C in their own desk with the help of a PC and a telephone. For example: HSBC is giving Hexagon facilities to their individual and corporate customer. Automated Teller Machine (ATM): Full abbreviation of ATM is “Automated Teller Machine” which acts like a teller point in a bank who takes and gives money over the counter. ATM is same as teller point but Technology run automatically through identity like card and password. Technology does not need any slip or Cheque but Technology is very much based on A/C holder’s ATM card and Technology’s Password. Those who are entitled for ATM card, bank has provided them a password against every single card. This is like a debit card. People can deposits their money in a bank account and they have entry or withdraw their money through ATM card, which is applicable for 24 hours a day and 365 days in a year. Technology has different name such as ATM, 24 hours banking card, money link card, e-cash, ready cash etc. In Bangladesh, some multinationals incepted the ATM booth in Dhaka since 1992-93. The Grind lays Bank was the pioneer in Bangladesh then after Standard Chartered Bank, American express Bank, HSBC, Bank Asia and seven others local private banks are the followers. Tele Banking: Tele-Banking customers to get access into their respective banking information 24 hours a day. Subscribers can update themselves by making a phone call. They can transfer any amount of deposits to other accounts irrespective of location from home or office. Now a day Mobile Phones are the easiest channels by which customers can reach the bank to access their account 24 x 7. So, banks generally have introduced following SMS Services this service, a customer can enjoy the following: Verify payment, receive status anywhere; Get alert automatically on an individual basis when loan installment falls due and becomes overdue; Save time & cost as this will minimize their visits their respective branches for simple queries. Real-time fund transfer: With the help of online banking service customer can transfer funds to any prime bank account in real time. In addition to that customer can transfer fund to their continuous loan account through online service and can avoid the crowd and hassle of going bank. Real-time utility bill payments Commercial banks generally have limited utility bill pay services enables the customers to pay postpaid cell phone bills easily. Customers can get this service at banks ATM booths or information kiosks round the clock. These bank ATM/Master Debit Card holders are eligible to enjoy these services.
  10. 10. 10 The lists of services are given bellow: Grameen post-paid cell phone bills only Robi post-paid cell phone bills only Banglalink post-paid cell phone bills only Airtel post-paid cell phone bills only Utility bills pay service provides 24/7 support and has the following features: Card holder can make payments any time at any Prime Bank ATM booth Customers will receive auto generated advice slips after the bills are paid The customer will need ATM card and pin code to access the Technology and the procedure is absolutely secured View FDR and deposit scheme information: With the help of banks websites customers can easily know about the detail information of different deposits schemes and FDR. View loan information: Bank’s website also contains loan features of most banks. Through website customer can know about the lending offerings of Prime Bank Limited. Transaction search: Transaction made by customers in different times can be checked out through online service. Statement downloads: Rather going to bank now customers can view and download transaction A/C, FDR and scheme statement through online service. Thus it will save time, money and energy of people. Charges and Fees: All these services are provided free of charge. Credit Card Bill Payments: Banks has both Credit card and Debit card through which customers can pay bills SWIFT: SWIFT is a bank owned non-profit co-operative based in Belgium servicing the financial community worldwide. It ensures secure messaging having a global reach of 6,495 Banks and Financial Institutions in 178 countries, 24 hours a day. SWIFT global network carries an average 4 million message daily and estimated average value of payment messages is USD 2 trillion. SWIFT is a highly secured messaging network enables Banks to send and receive Fund Transfer, L/C related and
  11. 11. 11 other free format messages to and from any banks active in the network. Having SWIFT facility, Bank will be able to serve its customers more profitable by providing L/C, Payment and other messages efficiently and with utmost security. Especially it will be of great help for our clients dealing with Imports, Exports and Remittances etc. Easy Pay Machine: It is a mechanical device which can accepted utilities bill like land phone bills, cell phone bills, Gas bills, WASA-DESA bills etc. The day after tomorrow bank will report to the particular authority to give acknowledgement on behalf of their customer. Some other electronic services like TV Banking, Mobile Banking; SMS Banking through cellular phone, Mail Banking etc is practicing ignorable way. But banks are trying hard to develop new products which can be done through electronic device like internet, telephone including cellular and mechanical devices. Use of technology in Banking and their performance: Up to date Banking has unbelievable tools to encourage and give confidence to their customers. In the customers viewpoint, things is to be very easier that is why, they buy the product or take the service, which is newly incepted. Electronic banking is one that such product which helps the customer to prompt thinking and can able to get cash any time within the 24 hours day schedule in a day. Plastic or artificial card development would appear to lay with the smart card and in particular its use as an electronic purse. The smart card has been defined by Worthington (1998b, p. 137) as ``a payment card that carries an embedded computer chip with memory and interactive capabilities, that allow it to exchange data at an electronic point of service (POS) terminal''. Smart card technology was developed over 35 years ago but its low acceptance into mainstream markets has been blamed upon a lack of supporting infrastructure and universally accepted standards. However, there is little doubt that smart cards have huge potential in terms of their application and recent evidence seems to show that predicted growth rates will continue as more application of smart card technology to electronic commerce is realized (McKechnie et al., 1998; 1999). The card may also contain personal information such as healthcare records; it can act as a security pass, and be used for specific payments, for example in meters, telephones and transport. While there are clearly consumer privacy and protection issues, the bundling of applications on to one card may offer advantages for consumers in the long run in that a multi- application card may be perceived as more useful than just an additional card. Worthington (1995) refers to cards used as electronic purses as ``pay before cards'' and suggests that they will challenge cash and low-value cheque transactions. Such cards should offer benefits to cardholders and retailers in terms of security, convenience and to issuers in reduced handling costs. There are a number of such cards now in use, the best known in the UK being Mondex and Visa Cash. Consumers can load cash onto their card from their bank, an ATM machine or, if they have the appropriate equipment, over the telephone. The common features of electronic banking in Bangladesh are as follows: - Electronic banking idea developed in Bangladesh since 1992 through several multinational banks. But most of the local and foreign banks are maintained electronic banking in their all branches. Here are some common features we have found on the banks in term of tech use banking in Bangladesh: 1. 24- hours cash deposit & withdrawal facility 2. Quick cash withdrawal without having queue 3. Account activities enquiry in any moment
  12. 12. 12 4. Statement request through ATM/Debit/Credit Card 5. Transfer own funds to other account number in same bank 6. Present Balance enquiry 7. More than16-hours shopping facilities 8. Deposit or Mail cash or cheque(s) (Cross cheque) through mechanical device. 9. Changing Personal Identity Number 10. Cash deposit which will originally deposit very next day of deposit that means do not need to go to the branch for every occasion. 11. Mini statement which contain 8-10 previous transaction records 12. Can able to pay utilities bill 13. Withdraw money by using VISA, PLUS, MASTER, MAESTRO and other credit card 14. Withdraw money from dollar account which gives taka by converting foreign currency Benefits of Technology use in banks: To the Customer: 1. Anywhere Banking no matter wherever the customer is in the world. Balance enquiry, request for services, issuing instructions etc., from anywhere in the world is possible. 2. Anytime Banking Managing funds in real time and most importantly, 24 hours a day, 7days a week according to convenience of the customers. 3. Brings down “Cost of Banking” to the customer over a period of time. 4. Cash withdrawal from any branch / ATM. On-line purchase of goods and services including online payment for the same. To the Bank: 1. Innovative, scheme, addresses competition and present the bank as Technology driven in the banking sector market. 2. Reduces customer to the branch and thereby human intervention. Inter-branch reconciliation is immediate thereby reducing chances of fraud and misappropriation. 3. On-line banking is an effective medium of promotion of various schemes of the bank, a marketing tool indeed. Integrated customer data paves way for individualized and customized services. Impact of technology on Banking System The banking system is slowly shifting from the Traditional Banking towards relationship banking. Traditionally the relationship between the bank and technology’s customers has been on a one-to- one level via the branch network. This was put into operation with clearing and decision making responsibilities concentrated at the individual branch level. The head office had responsibility for the overall clearing network, the size of the branch network and the training of staff in the branch network. The bank monitors the organization’s performance and set the decision making parameters, but the information available to both branch staff and their customers was limited to one geographical location. The modern bank cannot rely on branch network alone. Customers are now demanding new, more convenient, delivery systems, and services such as Internet
  13. 13. 13 banking have a dual role to the customer. They provide traditional banking services, but additional offer much greater access to information on their account status and on the bank’s many other services. To do this banks have to create account information layers, which can be accessed both by the bank staff as well as by the customers themselves. The use of interactive electronic links via the Internet could go a long way in providing the customers with greater level of information about both their own financial situations and about the services offered by the bank. Impact of technology on Privacy: Data being stored in the computers is now being displayed when required on through internet banking mobile banking, ATM‟s etc. all this has given rise to the issues of privacy and confidentially of data are: 1. The data processing capability technologies of the computer, particularly the rapid throughput, integration, and retrieval capability technologies, give rise to doubts in the minds of individuals as to whether the privacy of the individuals is being eroded. 2. So long as the individual data technology are available only to those directly concerned, everything seems to be in proper place, but the incidence of data being cross referenced to create detailed individual dossiers gives rise to privacy problems. Customers feel threatened about the inadequacy of privacy being maintained by the banks with regard to their transactions and link at computerized systems technology suspicion. The challenges for technology driven banking: Technology has not been a smooth sailing for banks keen to jump onto the technology bandwagon. There have been impediments in the path like the obduracy once shown by trade unions who felt that technology could turn out to be a threat to secure employment, further. The banks face difficulties to expand technologies branch networks in remote areas due to lack of facility of technologies. Another challenge the banks have had to face corners the inability of using technology of banks to retain the trained and talented personnel, especially those who have a good knowledge in technology. Increasing use of technology in banks has also brought up it’s security concerns. The passing of technology act has come as a boon to the banking sector and banks should now ensure to abide strictly by technology covenants. An effort should be also made to cover e-business in the country’s consumer’s laws. The choice of right channel, justification of tech investment on ROI, E-Governance disclosures, customers relationship management, penetration of tech in rural areas, outsourcing of tech operations are the major challenges and issues in the use of tech in banking operations. The challenges for technology driven banking are: 1) Inefficient and inadequate knowledge of the bank management about the technology driven banking. 2) Lack of proper strategic plan to gain and retain market share of the indigenous banks. 3) Lack of international standard communication channel. High cost of establishing technology driven banking system. Inadequate back and front
  14. 14. 14 office management. Lack of integrated plan among the banks and the Central Bank authority. 4) Inefficient clearing house facilities. 5) Inappropriate software and less trust by the bank authorities on local software. 6) Biasness of the management of bank towards foreign software. 7) Legal barriers and inappropriate policy framework. 8) Besides these, major impediments and risks associated with the implementation of innovative technology are: Data being stored in the computers is now being displayed when required on through internet banking, mobile banking, ATM etc. All these are threats for confidentiality of data. Cost associated with adoption of new technology might not bring cash flows required to cover that cost. So banks could face cost overrun or cost control problem. 9) Another problem banks face with implementation of latest technology is integration of existing system with the new one. In the field of IT, new technology is coming every day. The one which is very popular today might get obsolete tomorrow. So to have a competitive edge over the competitors the banks must always update their services. The movement towards technology driven banking might marginalize the customers who do not have internet access or who are not technologically sound (Khalil, Ahmed & Khan). The coverage of the private commercial banks and foreign commercial banks is concentrated mainly in urban and semi-urban areas. The rural parts of Bangladesh still remain outside of their services. According to Ali (2010), the major risk of internet 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. Findings: 1) The commercial banks in Bangladesh are using technology extensively these days. 2) The use of technology allows bank to keep their workforce in minimal level. 3) Because of the increasing use of technology in banking sectors customers are getting more faster & quality service than ever. 4) The transactions of the customers now are more secure than any time of the past. 5) People do not have to visit physical locations of the bank because of the bank’s virtual presence. 6) It is evident that many bank management & job holders do not have the proficiency to use the highest utility of technology.
  15. 15. 15 Recommendations: The recommendations of this study are mentioned below. For the scheduled banks, it is important to: Review their business strategy and create the required space for adopting technology driven banking. Fortify ICT department through providing training to IT employees and procuring essential 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 about the basic ICT related matters. The tech based banking products can be made more cost effective to make them more attractive to mass people. If the mass people can avail these banking services then the profit of the banks will increase from volume rather than single transaction. The management of the private commercial banks and nationalized commercial banks might allocate a part of their yearly profit for ICT penetration in banking activities and human resources development. They may also extend those services to the rural people of Bangladesh so that the rural people can also get the benefit of technology driven banking. In order to improve the growth in technology driven banking services banks can also take the following steps: To increase awareness of the consumers, benefits of technology driven banking can be promoted through advertising in print and electronic media. Most of the aged persons are reluctant to use the new technology. For them technology based banking is troublesome. So before designing any Technology Driven Banking in Bangladesh: Present Status, the banks must think about this type of consumers and try to introduce the service that can be used easily. The banks can give few incentives to the customers for using the technology driven services such as low service charge for maintaining the account of those customers. In order to detect and minimize the security risk the banks can take some security counter measures, such as, preventive measures or deterrent efforts. Preventive measures include using sophisticated security software and controlling the access such as advanced access control, intrusion detection, firewall and inspection mechanisms etc. Deterrent efforts include: educating the users of tech based banking services how to use those services and what will be the consequence of misuse, educating the IT personnel of banks about the security measures and developing security policy statements and guidelines. Besides all these, the government may provide assistance for reducing the cost of providing the technology driven banking services, 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 and environmental framework is essential for flourishing tech based banking.
  16. 16. 16 Conclusion: This assignment is a descriptive study where the main purpose was to highlight the present status, future prospects and challenges of technology driven banking. Technology Driven Banking in Bangladesh: Present Status, Future Prospects and Challenges 70 Now-a-days technology driven banking services are not 'nice to have' but an 'impossible to survive without' for all banks. It has changed the traditional banking system drastically and made banking service easy and accessible. But Bangladesh is a developing country with limited infrastructure facility and limited skilled manpower. Computer literacy of the people is very poor and information technology is in the infant state. A well functioned tech based banking system is dependent on the availability of a backbone network connecting the whole country; reliable and secure information and telecommunication infrastructure; ICT penetration in the banking sector; skilled operational personnel; and legal and regulatory framework. Both individual and joint efforts are needed to overcome the constraints in promoting the technology driven banking in the country. Therefore, the banking system needs upgradation and urgent measures are needed to create a level playing field for rapid expansion of technology driven banking in the country. Despite all constraints, efficient use of existing facilities can improve the recent condition of technology driven banking in Bangladesh.
  17. 17. 17 References: 1. Ahmed, Feroz and Islam, Md.Tarikul (2008). “E-Banking: Performance, Problems and Potentials in Bangladesh”, Business Review, Vol. 06, No. 1&2, January to December. 2. Ahmed, Nafid Imran (2010). “Encashing mobile remittance”, The Daily Star, April,15. 3. Ahsan, AFM Mainul (2009). “E-commerce in Bangladesh”, The Financial Express, Bangladesh, January 12 4. Ali, Muhammad Mahboob (2003). “E-Business in the age of Globalization: Bangladesh perspective”, The Bangla- desh Observer, September, 13. 5. Ali, Muhammad Mahboob, Mohsin, Chowdhury, Sifat-E and Yasmeen Farzana (2004). “E-Business in the Glo- baized world with special reference to Bangladesh: An analysis’, Business Review, Vol. 4, No. 1&2. 6. Buffam, William J. (2000). E-business and it solutions: An Architectural approach to Business Problems and Op- portunities, Addison-Wesely, USA. 7. Chaffey, Dave (2006). E-Business and E-Commerce Management, Prentice Hall: Financial Times Press, UK, 3rd edition. 8. Chandrasekhar, M. and Sonar, Rajendra M. (2008). “Impact of Information Technology on the efficiency and total factor productivity of Indian Banks”, South Asian Journal of Mangement, Vol. 15, No. 3, July- September, pp. 74-95. 9. Hoq, Ziaul, Kamal, Md. Shawkat and Chowdhury, A.H.M. Ehsanul Huda (2005). “The Economic impact of E- commerce”, BRAC University Journal, Vol. II, No. 2. 10. http://www.bangladeshinfo.com/gadgets/news_inner.php?nid=2343, July 22, 2009 11.www. primebankbd.com 12.www.pubalibangla.net. 13.www.bracbank.bd.com

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