Premier University

Faculty Of Business Studies

Section:D22st

Batch

Student Name ID

Saddam Hossain 1022114569

Mir Md Belal 1022114557

Sifuddin Ahmed 1022114559

Joyasree Ghosh 1022114684

Kohinur Akther 1022114580

Nishat yesmin sonia 1022114586

Group Member

Mrs.Tasmia TahlilLecturer

Faculty Of Business studies

Premier University

Mrs.Tasmia TahlilLecturer

Faculty Of Business studies

Premier University

Application Of Electronic Banking In Bangladesh

Application Of Electronic Banking In Bangladesh

Presentation on

Electronic Banking: electronic banking is a segment of

electronic business, which in turn encompasses all types of business performed through electronic networks.

EBS developed for three reasons:1)To protect and increase market share2)To reduce operating cost.3)To generate new revenue.

Components of e-

banking

Components of e-

banking

Banking system

software

Communication network

Delivery channel

Switching system

Basic components of electronic banking

ATM Cash Management

Debit card Wire transfer Credit card Corporate

Automated Point of sale(POS) Clearing

house(ACH) Cheque truncation Home Banking

Type of Electronic Banking

Retail electronic Banking services

Whole Electronic Banking Service

Electronic Banking services Offered By Bangladesh

ATMIt stands for automated teller machine.It is one of the most improvised way of transaction.As people do not feel comfortable to carry huge amount of money, they use ATMs.As ATM holders need to create a bank account and deposit money into the account.Bank provide ATM card with a pin number.By using this PIN number they can withdraw money from any AT M machine of that bank.

Card reader keypadDisplay screen

Screen buttons

Cash dispenser Deposit slot speaker

ATM is connected to host computer, and the host computer is connected to the Bank computer. Here the connection network is telephone network that may be leased line or dial up using modem. Host computer mainly connected as a gateway between ATM and Bank computer. Many ATMs can be connected through this host computer.

Steps of transaction process in ATM:

A/c and PIN is being ETN sends clearance signal

Checked in ATM to the ATM machine.

Machine.

Request for PIN

Debited the account

From the customer Send all transaction information to ETN

Account. server.

Debit card: Debit card is a plastic card it is issued by banks or financial institution to

the depositorsHold magnetic coded number for transaction.

Objectives of debit card services: Revenue generation: The bank can enhance their income by using that card in the following ways-Merchant discountInter charge feesCard feesInterest on credit line

Expenditure reduction:By using debit cards the expenses of paper transaction like file, voucher, letter etc. can be minimized, which were really expensive. Expenses can be reduced to a greater extent by reducing the number of employee.

Client service: Debit card is used as an alternative of cash, cheque and credit card. The client will feel comfortable at the time of payment.

Those who are involved with heavy banking transactions.

Those who perform transactions mostly by cheques.

Those people whose average income is high. Young people use debit cards more than the old. People who keep lower amount on an average in

their accounts. People who are interested to get card for travel

and entertainment. People who have more financial assets.

Credit card is a popular process in retail electronic banking. Generally if the clients have creditworthiness or have enough money in the deposit account. Then provide this plastic card to the clients. In spite of having debit balance in the deposit amount, a client can use this card. This card is used for payment of a product or service or for withdrawing cash from some specific institutions.

By issuing credit card bank can identify their valuable and responsible customer.Purchase of products or services and other bill payments are possible by using this card in a particular place.With the help of this card, anyone can withdraw advance cash from the financial institutions.

Advantages of credit card:

Point of Sale service :An advanced payment system which enables consumers to use an ATM card to pay for

goods and services, electronically debiting the card holders account and crediting the account of the merchant. In this system the account of the service provider and receive are simultaneously debited and credited instantly.

Money can be transferred by two ways; • Seller is required to make a sales draft like credit card. Then this sales draft would

debit the card owners account and credit the sellers account. • Respective clients/financial institutions/sellers accounts are to be debited or

credited by transferring taka from online point of sale terminals.

Components used in POSterminals of POSconcentrators terminalsswitching centrebank computer systems

Cheque truncation is a process of service where, financial institutions do not return the rejected and unhonoured cheques to clients. Financial institutions keep these checks with the monthly statements and provide rejected checks along with monthly statement to the clients.

Check truncation:Check truncation:

Retail automated clearing house services: ACH is an integrated process of service by which payments of different financial institutions are cleared and exchanged in electronic way. ACH is a computer based integrated system and it is the distribution place of paperless transactions. Electronic payments are the substitutes of papers and are recorded in machine-readable from in magnetic tape and one account is debited and another is credited. ACH exchanges electronic transactions within a specific geographical area.

Types of payments by ACHgovernment payment for any person or institutionsdirect deposit of payrollPayment of insurance premium approved earlier.Now a day, limited use of ACH can be found in the following types of payments.Payment of telephone billPayment of pre-approved mortgage, rent and loan instalmentsCash transfer from one business to another under a part of the cash management system.

Through developed electronic fund transfer system bank can offer its financial services to the doors of customers. Customer can open L/C, transfer fund, check their account sitting in their own desk with the help of his PC and a telephone at home. In this way customer can handle his all kinds of deal, payment and order before sitting in front of his own PC, that’s called Home Banking. The next version of home banking is Video Home banking(VHB).The internet is expected to be a major factor in home banking.

Home BankingHome Banking

Information retrieval: clients can get various information of regarding the accounts, price information, and product descriptions.

Transaction: clients can pay their bills, order the cheques, and purchase the instruments

Provide electronic information: clients can confirm deny loons, make any complaints, or transfer massages.

Computation: clients can calculate mortgage loan repayment schedule, prepare budget and make pre-costing.

VHB services are divided into 4 parts:

Wholesale electronic banking is such a banking system where banking activities are performed through inter-bank networks.1. Cash management: Raise the speeding up of collection of cheque and bills payable Careful controlling of the cash disbursement Monitoring of cash flows Investing the idle money

Wholesale Electronic Banking:

2. Wire transfer.Wire transfer is a process in which funds are transferred from render to receiver quickly and in due time. These types of transfer could be done within or outside the country. Wire transfer activities of electronic banking system include the following four stages:Payment ordering parties: Payment ordering mechanism.Payment processing and delivery.Payment advising.

3. Corporate clearing house:By clearing house, financial institution clear and exchange their electronic payments. Cash concentration strategy through ACH is very popular and widely used service. Corporations are going for ACH service after considering financial the facilities (Cost reduction, receipt of funds within one day etc.)

Customers need an Internet access service for accessing such kind of banking system. The customer will have an ID and confidential/secret password so that he/she can access their own account and transaction as an International Banking customer. Here customer can access the ledger balances, transfer of money, request something towards bank, and order a goods against this account

Internet Banking

1. Electronic money: electronic money includes-Electronic debit and credit system.Smart cardTrue digital money.

2. Electronic commerce:now e-commerce is an important aspect of internet banking. Auditing, payment of bills, investments, stock exchange activities and many other activities can be done using these internet banking systems.

3. Digital currency:digital currency has a lot of features like traditional currency. It does not require approval of banks or their party to make payment. Clients by metaphorical cash taken from participating bank. This electronic coin can be used like traditional coins from local hard drive in which is stored. Through this way, buyers and sellers can transfer funds without any help of third party and other financial institutions

Selecting concept of internet banking:

24 hours cash deposit and withdrawal facility.Quick cash withdrawal without having queue.Account activities enquiry in any moment.Statement request through ATM/debit/credit

card.Transfer own funds to other account number

in same bank.Present balance enquiry.More than 16 hours shopping facilities.Deposit or mail cash or cheque through

mechanical device.

The common features of electronic banking in Bangladesh:-

Changing personal identify number.Cash deposit which will originally deposit very next day of

deposit that means do not need to go to the branch for every occasion.

Mini statement which contain 8-10 previous transaction records.

Can able to pay utility bill.Withdraw money by using visa, plus, master, maestro and

other credit card.Withdraw money from dollar account which gives take by

converting foreign currency.

The main problem of introducing electronic banking in Bangladesh is in efficiency and lack of adequate knowledge of the bank management about the e-banking.

Lack of proper strategic plan to gain and retain market share of the indigenous banks. In addition, much bank management is not inclined to give services with electronic means.

Lack of international standard channel. Bangladesh inter-district telecommunication system, countrywide data communication system moreover, branch offices cannot be linked with their head office through single networking based on online real time basis.

Problems of introducing electronic banking in Bangladesh:

Lack of attractive remuneration to the technocrats. This motivates them to go abroad for higher remuneration.

Inadequate budget for establishing back and front office. In fact, it requires systematic and planned budget for expanding e-banking.

Lack of comprehensive legal structure is one of the problems in implementing e-banking in Bangladesh.

However, the people of villages are illiterate and they are not habitude of using electronic banking.

Government should create a congenial environment so that all government and private sectors could the benefit.

Provide adequate training and technological support to develop the manpower/ personnel working in the e-banking section need to be arranged by the management of government and private authority.

Developing the national as well as the international communication standard for providing e-banking services with case.

Banks should have their own strategic plans for automated market development.

Developing of integrated e-banking software within a short period of time.

A standard carrier design needs to be formed for the computer experts within the bank.

Clearing house operations are demanded to be fully automated.

Countries legal structure also needs to be technology based.

Conclusion

In this age of information technology and competitive world, banking sections should be modernized. In order to keep pace with the changing world we have to replace our traditional banking systems by electronic banking systems. It has been found that local private and state owned banks are not doing well s compared to foreign banks. Foreign banks are using new technology and they are earning more. The banking sectors of our country should use electronic banking system so that they can provide more services to their customers and earns sustainable amount of money to support the national economy.