Chapter 1

INTRODUCTION OF ATM

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1.1 Background

A bank is a financial institution licensed by a government. Its primary activities include borrowing and lending money.Banks are important players in financial markets and offers financial services such as investment funds. Banks provide the way for people to deposit their money and withdraw that money whenever needed. In past, people used to deposit and withdraw their money by going to their respective bank. They have to stand in queue for a long time to perform such activities. Due to this,they have to spend a lot of their valuable time for merely to perform such things.With the advent of new technology in the banking field,there is radical change in the process of aforementioned stuffs.Among of recent technologies used in banking sector,Automated Teller Machine(ATM) is playing a relevant role to ease the life of people. Through this, they have option for deposit and withdraw the money without standing the queue in bank office.

1.2 Introduction:

An Automated Teller Machine is computerized telecommunication device that provides a financial institution’s customers a secure method of performing financial transactions in a public space without the need for a human clerk or bank teller. An Electronic Funds Transfer(EFT) terminal that allows customers using a pin-based debit(ATM) card to initiate transactions (e.g. deposits, withdrawls, account balance inquiries). Computer controlled terminal located on the premises of financial institutions or elsewhere, through which customers may take deposits, withdrawals or other transaction as they would through a bank teller. Other terms sometimes used to describe such terminals are customer-bank communications terminal (CBCT) and remote services unit (RSU). Groups of banks sometimes share ATM networks located throughout a region of the country that may include portions of several states. A machine, activated by a magnetically encoded card or other medium that can process a variety of banking transactions. This includes accepting deposits and loan payments, providing withdrawals and transferring funds between accounts. Using an ATM, customers can access their bank accounts in order to make cash withdrawals and check their account balances. Many ATMs also allow people to deposit cash, transfer money between their bank account, pay bills or purchases goods and services.

1.3 History

A mechanical cash dispenser, arguably an ATM was developed and built by Luther George Simjian and installed 1939 in New York by the city Bank of New York, but recovered after 6 months due to lack of customers acceptance. Thereafter, the history of ATMs paused for over 25 years until De La Rue developed the first electronic ATM which was installed first in Enfield

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Town in North London on June 27,1967 by Barclays Bank. Shepherd Barron was awarded an OBE in the 2005 New Year’s Honors List. The first ATMs accepted only a single use token or voucher which was retained by the machine. ATMs first came into wide use during the early to mid 1980s.

1.3.1 History in Nepal

First of all the credits Cards were introduced by the Nepal Arab Bank (now NABIL bank) in early 1990’s.Then the automated teller machine (ATM) was first introduced by another Joint Venture Bank. Himalayan Bank Ltd in 1995. Then, the uses of ATM machines were popular and demand was high because of its reliable services and fast cash technology. And many other commercial Banks introduced their ATM cards and ATM machines. Eventually, now many commercial as well as development banks have providing this services through many ATM machines. Even the Banks owned by Governments have started this service due to its demand by the customers. Such as VISA and Master Cards, there was development of a smart card in Nepal which was called the SCT card.

1.4 TYPES

Types by Physical characteristics

There are two main types of ATMs that have developed over time.

a.Mono-functions devices:Those devices that are only able to perform one type of mechanism for financial transactions. These machines are able to do only one specific functions such as cash dispensing or statement printing, They can’t perform more than one operations. Most of them are only used for printing the statement or dispensing cash only but not both.

b.Multi-function devices

Those devices which incorporate multiple mechanisms to perform multiple services. These devices are able to more than one operation and these machines are becoming more popular as they provide many functions within the same devices rather than different devices. These machines can perform operations such as accepting deposits, dispensing cash, printing statements,etc all within a single footprint.

1.5 Components of ATM

The different components of ATM has been shown in figure-1.Generally, an ATM has two input device and four output devices. Here,input device act as interface which is able to communicate with ATM for taking input from user such as PIN number and card reader. Similarly, an ATM has four output device such as display screen and receipt printer. The different components of ATM has significant role in interacting with the ATM customers.

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Figure-1: Components of ATM

a. Card reader - The card reader captures the account information stored on the magnetic stripe on the back of an ATM/debit or credit card. The host processor uses this information to route the transaction to the cardholder's bank.

b. Keypad - The keypad lets the cardholder tell the bank what kind of transaction is required (cash withdrawal, balance inquiry, etc.) and for what amount. Also, the bank requires the cardholder's personal identification number (PIN) for verification. Federal law requires that the PIN block be sent to the host processor in encrypted form.

And an ATM has four output devices:

c. Speaker - The speaker provides the cardholder with auditory feedback when a key is pressed.

d. Display screen - The display screen prompts the cardholder through each step of the transaction process. Leased-line machines commonly use a monochrome or color CRT (cathode ray tube) display. Dial-up machines commonly use a monochrome or color LCD.

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e. Receipt printer - The receipt printer provides the cardholder with a paper receipt of the transaction.

f. Cash dispenser - The heart of an ATM is the safe and cash-dispensing mechanism. The entire bottom portion of most small ATMs is a safe that contains the cash.

1.6 Working Mechanism of ATM

An ATM is simply a data terminal with two input and four output devices. Like any other data terminal, the ATM has to connect to, and communicate through, a host processor. The host processor is analogous to an Internet service provider (ISP) in that it is the gateway through which all the various ATM networks become available to the cardholder (the person wanting the cash).Most host processors can support either leased-line or dial-up machines. Leased-line machines connect directly to the host processor through a four-wire, point-to-point, dedicated telephone line. Dial-up ATMs connect to the host processor through a normal phone line using a modem and a toll-free number, or through an Internet service provider using a local access number dialed by modem.

Leased-line ATMs are preferred for very high-volume locations because of their thru-put capability, and dial-up ATMs are preferred for retail merchant locations where cost is a greater factor than thru-put. The initial cost for a dial-up machine is less than half that for a leased-line machine. The monthly operating costs for dial-up are only a fraction of the costs for leased-line.

The host processor may be owned by a bank or financial institution, or it may be owned by an independent service provider. Bank-owned processors normally support only bank-owned machines, whereas the independent processors support merchant-owned machines.

1.7 Transaction Mechanism in ATM

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Figure-2: Transaction mechanism in ATM

When a cardholder wants to do an ATM transaction, he or she provides the necessary information by means of the card reader and keypad. The ATM forwards this information to the host processor, which routes the transaction request to the cardholder's bank or the institution that issued the card. If the cardholder is requesting cash, the host processor causes an electronic funds transfer to take place from the customer's bank account to the host processor's account. Once the funds are transferred to the host processor's bank account, the processor sends an approval code to the ATM authorizing the machine to dispense the cash. The processor then ACHs the cardholder's funds into the merchant's bank account, usually the next bank business day. In this way, the merchant is reimbursed for all funds dispensed by the ATM. An independent ATM host can access any bank. It also supports a large number of ATMs placed with different merchants.

1.8 Access issues or Barriers:

People with disabilities experience a range of access issues when attempting to interact with automatic teller machines. These may vary depending upon the nature of the disability, but the overall outcome is lack of comfortable and effective use of ATM facilities. This may lead to over-the-counter surcharges or even denial of access to funds.This section of the report will briefly mention some issues of accessibility for a variety of groups of people with disabilities.

i) Access issues for people who are blind:

Accessibility to ATMs for people who are blind is that the screen cannot be read and some or all of the keyboard functions are unclear or unlabelled.   Older machines are better suited to people who are totally blind.Finding an ATM, and being sure it accepts the users card is another common barrier.To better understand how difficult it is for a blind person to independently use an ATM, you might imagine yourself approaching an ATM which has a broken screen and faded or meaningless key labels. If you tried to get some money out, you would

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most likely get lost or confused with all the steps involved, because you would not be getting any feedback about your progress.If you had a really good memory, maybe you would be successful, but you would be very uncertain about whether you would be able to get the funds without assistance.Memorizing the full sequence to withdraw cash was the main strategy employed by blind ATM users.

ii) Access issues for lower vision people:

For people with low vision, the problem is the difficulty encountered reading the ATM signage, screen, key labels and receipts. Newer ATMs with larger clearer screens are preferred by people with some residual vision.Most people with low vision learn the basic sequence required for ATM transactions and their residual vision is often sufficient for them to carry out the transaction assuming everything goes as planned.

iii) Access issues for hearing impaired user:

For people who are deaf or hearing impaired, use of ATMs in many cases doesn't present major problems, but if the machine uses beeps to indicate errors or key-presses, then these probably won't be heard. Because (for many people who are deaf or hard of hearing) English is not a first language, it is important that the messages and instructions appearing on ATM screens are in clear, easy-to-read language.

iv) Access issues for deaf-blind user:

Access to ATMs for people who are both deaf and blind is particularly difficult. There are often subtle audio cues used by blind ATM users (such as beeps, clicks, thermal printer and so on) which partially compensates for not being able to read the ATM screen. People who are both deaf and blind would have no such cues to assist them.Braille output for important screen information would be the only option available to this group.

v) Access issues for people with learning disabilities:

ATMs can cause difficulties for people with cognitive or learning disabilities when the steps in the transaction are not consistent, logical and focused on the result. This group needs consistency of steps in transactions, without distractions and a limited number of potentially distracting choices.If additional advertising messages or unexpected questions are inserted into the already complicated and differing sequences, this situation will become worse.A spoken audio equivalent of the ATM screen information (through speaker or headphones) would most likely assist some people in this group through reinforcement, and also accommodate those who cannot read effectively.

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A more iconic (pictorial) set of screen prompts may be better suited to some people since it relies less on a good knowledge of English and reading ability. However, if this were offered as an alternative user interface, it would be necessary to identify which users wish to use the pictorial version and which users preferred text or audio modes of interaction.   Web-based ATM technologies would lend themselves better to such alternatives, and the use of alt-text could make such screens more accessible to people with vision impairments.

vi) Dyslexia, NESB and people who can’t read:

For people who are dyslexic (for whom letters and numbers regularly get transposed or out of order) a voice enabled ATM would result in less confusing and error-prone ATM interactions.People from a non English speaking background (NESB) would similarly benefit from voice guidance in addition to the screen display, particularly when many can speak simple English, but have difficulties reading it comfortably.The percentage of Australians who are unable to read is substantial, so voice output for ATMs would also benefit this segment of the community.It is commonly recognised that everyone has a preference for either audio, visual or tactile modes of learning and communication.  

1.9 Advantage of Automated Teller Machine1.9.1 Withdraw cash

The first and foremost advantage that ATMs are providing us is that it allows to withdraw the cash from machine whenever money needed.An individual would make its cash withdrawn without having queue just like in the bank.

1.9.2 View balancesThe second benefit which customers gets through ATM is that it allow customer to know about th balances by checking the balance in machine.We need not to go bank for balance inquiry. Thus,a customers can savers his/her valuable time and effort.

1.9.3 Deposit CashSome of the ATM machine provides deposit facilty to deposit the cash through the machine.Using this facility, a customer need not to go bank for merely deposit the money in his/her account.

1.10 FRAUD

As with any devices containing objects of value,ATM and the systems they depend on to function are the targets of frauds.

1.10.1 Fake ATMs The first known instance of a fake ATM was installed at shopping mall in Manchester,Connecticut in 1993.By modifying the inner workings of a Fujitsu model

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7020,a criminal gang known as The Bucklands Boys was able to steal information from cards inserted into machines by customers.

1.10.2 Operational FraudIn some cases, bank fraud could occur at ATMs whereby the bank accidently stocks the ATM with bills in the wrong denominations,therefore giving the customer more money than should be dispensed.In a variation of this,WAVY-TV reported an incident in Virginia Beach of September2006 where hacker who had an admin password for a gas station’s white label ATM caused the unit to assume it was loaded with $5 USD bills instead of $20s,enabling himself and many subsequent customers to walk away with four times the money they said they wanted to withdraw. ATM behavior can change during what is called “stand-in” time where the Bank’s cash dispensing network is unable to access databases that contain account information(possibly for database maintainance.

1.10.3 ATM card fraud

1.10.3.1 TheftFor a low tech form of fraud, the simplest is to simply steal a customer’s card. A later variant of this approach is to trap the card inside of the ATM’s card reader with a device often referred to as Lebanese loop.

1.10.3.2 CloningThe concept and various methods of a copying the contents of an ATM card’s magnetic stripe on to a duplicate card to access the other peoples financial information was well known in the hacking communities by late 1990. In the 1996, Abdrew Stone, a computer Security consultant from Hampshire in the Uk was convicted of stealing in excess of 1 million UK pound(at the time that was US$1.6 million) by pointing high definitionvideo cameras at ATMs from a considerable distance, and by recording the card numbers,expiry dates,etc.By contrast,a newer high techmodus operand involves the installation of a magnetic card readr over the real ATM’s card slot and the user of a wireless surveillance camera or a modified digital camera to observe the user’s PIN.

1.10.3.3 Combating stolen cards and informationIn an attempt to stop these practices,countermeasures against card showing card cloning have been developed by the banking industry, in particular by the use of smart cards which can not easily be copied or spoofed by an unathourized devices, and by attempting to make the outside of their ATMs tamper evident.EMV is widely used in the UK (Chip and PIN) and parts of Europe but when it is not available in a specific area,ATMs must fallback to using the easy to copy magnetic stripe to perform transaction.

1.11 Security

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Security, as it relates to ATMs has several dimensions.ATMs also provide a practical demonstrations of a number of security systems and concepts operating together and how various security concerns are dealt with.

1.11.1 PhysicalEarly ATM security focused on making the ATMs invulnerable to physical attack;A number of attacks on ATMs resulted,with thieves attempting to steal entire ATMs by ram-raiding.Another attack method is to seal all openings of the ATM with silicon and fill the vault with a combustible gas or to place an explosive inside, attached or near the ATM. Modern ATM physical security, per other modern money-handling security, concentrates on denying the use of money inside the machines to a thief, by means of techniques such as dye markers and smoke canisters.

1.11.2 Transactional secrecy and customer identity integrityThe security of ATM transaction relies mostly on the integrity of the secure cryptoprocessors:the ATM often uses commodity components that are not considered to be “trusted systems”. Encryption of personal information, required by the law in the many jurisdictions, is used to prevent fraud. Sensitive data in ATM transaction are usually encrypted with DES, but transaction processors now usually require the use of Triple DES.Remote Key Loading Techniques may be used to ensure the secrecy of the initialization of the encryptions keys in the ATM. Message Authentication Code(MAC) or partial MAC may also be used to ensure messages have not been tampered with while in transit between ATM and the financial network.

1.11.3 Device operation IntegrityOpening on the customer side of ATMs are often covered by mechanical shutters to prevent tampering with the mechanism whey they are not in use. Alarm sensors are placed inside the ATM and in ATM servicing areas to alert their operators when doors have been opened by unauthorized personnel. Rules are usually set by the government or ATM operating body that dictate what happens when integrity systems fail. Depending on the jurisdiction, a bank may or may be liable when an attempt is made to dispense a customer’s money from an ATM and the money either gets outside of the ATMs vault or was exposed in a non secure fashion or they are unable to determine the state of the money after a failed transaction.

1.11.4 Customer security while using ATMsIn some areas, multiple security cameras and security guards are an ubiquitous ATM feature. Critics of ATM operators assert that the issue of customer security appears to have been abandoned by the banking industry;At least as far back as July 30,1986 critics of the industry have called for the adoption of an emergency PIN system for ATMs, where the user is able to send a silent alarm in response to a threat.

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Chapter 2

FIELD VISIT AND

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INTRODUCTION OF ORGANIZATION

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2.1 Field Selection

2.1.1 Field selection Criteria

We have used various methodologies to select the organization for our case study of ATM. Some of the methodologies considerations used for selection are cited below:

i. The quality of ATM services provided by the organizationii. The response time taken by the organization to the customer problems about

ATM services,iii. The ATM services provided by the organization in the remote areasiv. Total number of ATM operated by the organizationv. Special ATM services for the Handicapped and impaired user

Keeping above consideration in our mind, we have select two organizations for our case study of ATM. The organizations are:i. KIST Bankii. Standard chartered Bank

2.1.2 List of Activities

We have performed different activities in above listed organization to garner information from our case study of client server architecture of ATM. The activities which are done in the organization are:

i. Interview with Technical personnela. Rishi Neupane (IT department manager, KIST Bank, Anamnagar)b. Spikenard Chaudhary (ATM technician, Standard chartered Bank,

Baneshwor) ii. Use of questionnaire iii. Taking photos and videosiv. View of database server and running application

2.2 Introduction of Organization

2.2.1 KIST Bank

2.2.2.1 Methodology of study

The methodology used to gain information was interview and field visit. Field visit had been to KIST bank main office at Anamnagar,kathmandu. There we had interviewed Mr. Rishi Neupane, Manager of IT department. He was our mentor who provided the details of how KIST bank operating ATM service throughout Nepal.

2.2.1.2 Introduction to Kist Bank:

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Kist Bank Ltd. was initially incorporated in 2002 as a ‘C’ class financial institution with a paid up capital of NPR 30 Million, the Kist Merchant Banking and Finance Limited and has been upgraded to ‘A’ class commercial bank on May, 2009, the Authorized Capital of the Bank is Rupees 5 billion and the Issued & Paid-Up Capital is Rupees 2 billion. 60 percent of the Paid-Up Capital is held by the promoter and remaining 40% is held by the general public.

The professional team along with dedicated employees is always looking forward to serve the customers, understanding the needs and designing the tailored products. The bank operates in a highly automated environment in terms of information technology and communication systems, which enables to offer prompt services. The bank has put in substantial effort and investment in acquiring the best technology available to build its infrastructure to make fast access for its valued customers. The company is driven by the values of efficiency in operations, integrity, and a strong focus on catering the needs of every customer by offering high quality and cost effective product and services.

The Bank has been providing its service to its customers through its own office building at Anamnagar in the capital, as well as in other different parts of country. We are available with 44 branches spread throughout the country with the eagerness to serve the customers. Kist bank stands for the customers’ convenience, support and providing Power to Succeed.

2.2.1.3 Branches of Kist Bank

Main branch, Anamnagar Koteshwor BirgunjBagar hairaini BhainsepatiBanepa Lalitpur JorpatiBhairahawa Manigram KhichapokhariBhaktapur hairaini JanakpurBiratnagar Lalitpur MahendranagarBirtamod Manigram DhangadiButwal Narayanghad AmarpathDharan Nepalgunj KalimatiDamauli New Road ThamelDamak Pokhara KalankiDolakha Sinamangal TulsipurDurbar Marg Sukedhara GhorahiGulariya Mangal Bazar GongabuItahari Palpa MaharajgunjHetauda Dhangadi

2.2.1.4 ATM Services provided by KIST Bank

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KIST is providing self service banking (SSB) to its esteem customers through Kist SSB Card in collaboration with Smart Choice Technologies (SCT). Till date KIST bank has 25 ATM outlets and it has planned a total of 78 ATM outlets by this year. The customer can transact from its terminal free of cost. In additional to this customers can use any other SCT member banks' terminal paying charges.

The customers can now have access to 24 hours banking service through our 20 ATM locations which have been listed here below:

SN. Location01 Anamnagar ATM, Anamnagar02 Tripureshwor ATM, Tripureshwor03 Jawalakhel ATM, Jawalakhel04 Newroad ATM, Newroad05 Sukedhara ATM, Sukedhara06 Butwal ATM, Butwal07 Manigram ATM, Rupandehi08 Bhairahawa ATM, Bhairahawa, Rupandehi09 Nepalgunj ATM, Nepalgunj10 Infront of Jaljala Hall, Biratnagar11 Biratnagar Chowk, Itahari11 Hikkola Chowk, Birtamode12 Chata Chowk, Dharan13 Buspark Road, Narayanghad14 Sabhagriha Chowk, Pokhara15 Bagar, Pokhara16 Damauli, Tanahu17 Buspark Chowk, Banepa18 Sinamangal, Kathmandu19 Koteshwor, Kathmandu20 Bagbazar, Kathmandu21 Damak -10, Jhapa22 Suryabinayak, Bhaktapur

2.2.1.5 Future Plan

As the Kist Bank has set its vision to be the best bank in terms of operational excellence and superior financial performance, it has action plan in place in order to accomplish it. The Bank has given prime focus in physical infrastructure and human resources development, acquiring of state of art information technology to equip the Bank in order to make it competitive, satisfy customers and have the most secured

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transactions, enhance the distribution outlet so that the Bank could reach to the un-banked area and serve the needy people and contribute to the economic development of the country. A few key future plans, which the Bank has, are: 

1. Have own Bank buildings at possible Branch locations. Currently, the Bank has been providing services to customers from its own buildings located at Anamnagar, Birtamod, Damak, Biratnagar and Narayangarh. The Bank has planned to construct own multi storey building equipped with modern technology within Kathmandu valley for its main Branch and Head Office. The dream building should be spacious for more than 500 employees.

2. Develop own man power to take the higher responsibilities. Due to increase in number of players, lack of quality human resources has been felt in the market. The Bank has therefore planned to hire qualified individuals in large quantity and train the staffs, in Kist Culture, both theoretically and practically and prepare them to take the responsibilities. For this, the Bank has established Training and Development Department at Head Office.

3. Increase the branch outlets to at least 50 by the end of Fiscal Year 2066/67 (2009/10), from existing 26 across the country. Once the regulator allows Nepalese banks to open branches outside the country, the Bank plans to open the branches in overseas where large numbers of Nepalese are residing. To provide banking services to people belonging to un-banked areas, the Bank  plans to commence Banking Haat Operations after taking approval from Nepal Rastra Bank.

4. Increase customer base from existing 1,00,000 to 3,00,000 by Fiscal Year 2066/67 (2009/10).

5. Launch international Debit and Credit Cards like Visa, Master and others.6. Expand the remittance business making accessible to the large strata of people.7. Develop and launch innovative and customer friendly products to meet the actual

needs of the people who are deprived of banking  services. For this, the Bank has established Research and Development Department to carry out research and develop market oriented products and services.

8. Support the investors to start large infrastructure development projects in the country. The bank also plans to promote micro finances to develop self sustainable enterprises and self reliant people to up lift the economic development of the country.

2.2.2 Standard Chartered Bank Limited

2.2.2.1 Methodology of Study

The methodology used to gain information was interview and field visit. Field visit had been to Standard Chartered Bank Limited main office at Anamnagar,kathmandu. There we had interviewed Mr. Sikendra Chaudhary, ATM technician of Standard Chartered Bank Limited. He was our mentor who provided the details of how Standard Chartered Bank Limited operating ATM service throughout Nepal

2.2.2.2 Introduction of Standard chartered Bank Limited

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Standard Chartered Bank Nepal Limited has been in operation in Nepal since 1987 when it was initially registered as a joint-venture operation. Today the Bank is an integral part of Standard Chartered Group who has 75% ownership in the company with 25% shares owned by the Nepalese public. The Bank enjoys the status of the largest international bank currently operating in Nepal.Standard Chartered Group employs almost 60,000 people, representing over 100 nationalities in over 50 countries in the Asia Pacific Region, South Asia, the Middle East, Africa, the United Kingdom and the Americas. This diversity lies at the heart of the Bank's values and supports the Bank's growth as the world increasingly becomes one market.With strong organic growth supported by strategic alliances and acquisitions and driven by its strengths in the balance and diversity of its business, products, geography and people, Standard Chartered is well positioned in the emerging trade corridors of Asia, Africa and the Middle East. An integral part of the only international banking Group currently operating in Nepal, the Bank enjoys an impeccable reputation of a leading financial institution in the country. With 15 points of representation and 13 ATMs across the Kingdom and with around 350 local staff, Standard Chartered Bank Nepal Ltd. is in a position to serve its customers through a large domestic network. In addition to which the global network of Standard Chartered Group gives the Bank a unique opportunity to provide truly international banking in Nepal.Standard Chartered Bank Nepal Limited offers a full range of banking products and services in Wholesale and Consumer banking, catering to a wide range of customers encompassing individuals, mid-market local corporate, multinationals, large public sector companies, government corporations, airlines, hotels as well as the DO segment comprising of embassies, aid agencies, NGOs and INGOs. The Bank has been the pioneer in introducing 'customer focused' products and services in the country and aspires to continue to be a leader in introducing new products in delivering superior services. It is the first Bank in Nepal that has implemented the Anti-Money Laundering policy and applied the 'Know Your Customer' procedure on all the customer account.

2.2.2.3 Branches of Standard Chartered Bank Limited

1. Bhairahawa Branch2. Biratnagar Branch3. Birgunj Branch4. Butwal Branch5. Dharan Branch6. Hetauda Branch7. Lalitpur Branch8. Lazimpat Branch9. Lakeside Branch10. Narayangarh Branch

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11. Naya Baneshwore Branch12. Nepalgunj Branch13. New Road Branch14. UN Counter15. B.P.Koirala Institute of Health Sciences,Dharan16. British Gurkhas, PPO Pokhara17. Manipal Counter

2.2.2.4 ATM services Provided by Standard Chartered Bank Limited

Standard chartered Bank Limited has been playing significant role in providing the ATM services to its customers across different zone of Nepal. This bank provides withdrawing as well as depositing facilities through which its client can withdraw and deposit the money. There are all together 20 ATMs across Nepal in which five of them are providing deposit option to its clients.

Maharajgunj, Kathmandu Boudha, KathmanduKamaladi, Kathmandu Naya Baneshwor,KathmanduUN Building, Kathmandu New Road, KathmanduWorld Trade Center, Kathmandu Thamel, KathmanduLazimpat, Kathmandu Jawalakhel, LalitpurPulchowk, Lalitpur Mangal Bazaar, LalitpurBPKIHS, Dharan Lakeside, PulchowkNew Road, Pokhara BhairawaIthari NarayanghatLakeside, Pokhara Thamel, Kathmandu

Those ATM which provides deposit option as well are located in following place

ATMs LocationATM-Thamel, Kathmandu Kathmandu Arcadia Building, Near Yin Yang

Restaurant, Thamel, KathmanduATM-Thamel, Kathmandu Kathmandu Guest House, Thamel, KathmanduATM-Lazimpat, Kathmandu Standard Chartered Bank Nepal Ltd. Lazimpat,

KathmanduATM-Naya Baneshwor, Kathmandu Standard Chartered Bank Nepal Ltd.Naya

Baneshwor, KathmanduATM-Lakeside, Pokhara Standard Chartered Bank Nepal Ltd. Pokhara,

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Chapter 3

TECHNICAL ASPECTS AND WORKING ARCHITECTURE OF ATM

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3.1 Architecture of ATM in KIST bank

The client server architecture of ATM in KIST bank reveals only for the process of withdrawing since there is deposit option in its ATM. Therefore, below figure demonstrate the withdrawing mechanism with the support of client server architecture.

Figure-3: Client-Server Architecture of ATM in KIST Bank

The client server architecture has been shown in above figure. In this figure, the sequence of process has been labeled in number from 1 to 7.

Process 1. In first step, the client or customer insert the card in ATM machine

Process 2. The Bank Information Number (BIN) is transferred to the Smart card Technology (SCT) switch. After getting BIN number, the SCT switch compares that BIN number with other different bank BIN number. Since, each bank has 6 digit unique BIN number, the SCT switch makes reorganization of the bank.

Process 3. The SCT switch send request to the Bank host to communicate with the ATM machine and also send the acknowledgement of receiving BIN number to the ATM machine simultaneously.

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Process 4. The Bank host acknowledges the request of SCT switch for communication.

Process 5. Bank host check the Account number of that ATM card holder and make transaction.

Process 6. In this step, there is updation of that client account according to transaction made before.

Process 7. The Bank host sends the final updation in receipt to its card holder.

3.2 Architecture of ATM in Standard Chartered Bank Limited

3.2.1 Steps followed to deposit the money through ATM

As standard chartered Bank Limited provides deposit facilities in its five ATM resides in various part of Nepal, the simple process of how to deposit the money is listed below.

step 1. Enter your ATM card and password and then follow the instructions as directs you

step 2. Press the deposit button to start the process of depositing your money.

step 3. Enter the total amount of money you want to deposit and must be in figures

step 4. Press continue and ask for an envelope

step 5. Count your money and put them in the envelope

step 6. Seal your envelope properly and then put it back

step 7. Press continue and wait while processing.

step 8. Get your receipt and finally remove your card

3.2.2 Architecture of ATM for deposit operation in standard chartered Bank Ltd.

The client server architecture for deposit operation of ATM followed by Standard Chartered Bank Limited is shown below

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Figure-4: Architecture for deposit operation of ATM in Standard Chartered Bank Ltd.

step 1. In first step, the user inserts card into ATM machine

step 2. In this step, ATM machine sends the pin information to the centralized server to verify the account

step 3. In this step, the centralized server sends the account confirmation

step 4. In this step, the transaction made is stored only on the internal database and at the same time, transaction is updated in Centralized database.

step 5. In this step, the internal db sends acknowledgement of the record made to the machine

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Chapter 4

CONCLUSION, RECOMMENDATION AND ANALYSIS OF ATM

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4.1 Conclusion and Recommendation of ATM Services of KIST Bank4.1.1 Conclusion

As going through the field visit of KIST bank, we came to know about the different client server aspects of ATM services operating there. KIST bank is providing quality ATM services to its clients. Some of the drawbacks which we have encountered during our field visit on ATM are cited below.

4.1.1.1 Drawbacks

Though ATM provides significant services to the people, some people are still reluctant to use this service. Some of the reasons behind this reluctance are cited below

i. As it is advanced technology, the illiterate people are getting problem while using this machine. They have difficulty to get acquainted with the system.

ii. The deposit facilities through the ATM machine are not available in most of bank.

iii. The abundant use of ATM machine is only centralized i.e. they are only giving more focus on urban areas and neglect the rural areas so that the remote denizens will able to access such services.

iv. The security option used in the system sometimes gets weak and weedy so that other unauthorized person have may commit illegal crime through authorized person card.

v. Sometime, while using this service, system get down due to over traffic congestion.

4.1.2 Recommendation

i. The ATM services should be decentralized .i.e. such services should access to the remote people.

ii. The deposit facilities should be implemented so that people can do depositing and withdrawing process though a single machine.

iii.The security used in the system must be well designed and integrated.iv.The Graphical user interface used in the ATM should be well understandable by illiterate

people.v. The annual charge which is charged by bank should be discounted to the poor people.

4.2 Conclusion and Recommendation of ATM services in Standard Chartered Bank Limited

4.2.1 Conclusion

Through our case study of ATM in Standard chartered Bank Limited, we give more emphasis on the working principle of deposit operation through ATM. It can be cleared that ATM has benefited not only individuals but the entire society through its services. It has

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upgraded the living standards of individuals through its efficient and secure services. Through such ATM services, it made possible for the entire nation to competitor in global financial market.

Some of the limitation which plays the negative role and affecting the efficient running of ATM services cited below.

4.2.1.1 Limitation.

i. Lack of skilled manpower to troubleshoot the problem which makes its customer to have less credulity in such advanced technology.

ii. There is always exist problem in compatibility between hardware(ATM machine) and software.The hardware parts such as ATM machine is developed by one vendor and its software is developed by another vendor which often creates the problem of incompatibility.

iii. There is no extra functions and facilities in ATM for impaired and disabled people.

iv. Deposit operation is partially computerized.After having deposit operation by customers, the technical personnel must involve in the end of day to reconcile different things.So,still they have to rely on manual operation.

4.2.2 Recommendation

From our case study, we came to know about different things of ATM operated by standard chartered Bank Limited. Thus, we recommend some suggestion to standard chartered Bank Limited to ameliorate the services of ATM.

i. Deposit operation should be totally computerized.If the deposit operation is totally computerized ,then there will be no need of any manual work for reconcile different thing needed to do the operation.

ii. There should be complete compatibility between hardware(ATM machines) and software.The Vendor which developing ATM machine should make compatible software so that it demolish the problem of incompatibility.

iii. There should be focus on ATM services for impaired and disabled people.

4.3Comparative analysis

Here we present a comparative analysis between KIST bank and Standard Chartered Bank LTD’s ATM operation which we have encountered during our case study.

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KIST bank Standard Chartered Bank

It is a National bank It is an International bank

It only supports withdraw operation from ATM

It supports both withdraw and deposit operation from ATM

It uses SCT network It uses VISA-electron

It Uses fiber optics for transferring information.

It uses VSAT for transferring information.

Compatibility between hardware and software

Not much compatibility between hardware and software.

Focus on national network Focus on international network.

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Appendix

1. Smart Choice Technologies(SCT)

SmartChoice Technologies P. Ltd. is a company registered in Nepal and promoted by well-established entrepreneurs. The company was established in 2001. The company has deployed a first-of-its-kind initiative in Nepal creating an integrated shared services network (SCT-Network) for Automated Teller machines (ATMs) and Point-of-sale (POS) Terminals, managed through a national switch. The SCT-Network is a fully integrated network supporting multiple device types and card acquiring standards. This network has been made available, on a subscription basis (pay-per-use), to banks and financial institutions across the country. Besides the network, this national switch will also operate and manage domestic & international gateways and settlement systems. For inter-bank settlement, the company has appointed a settlement bank, which is respon-sible for the daily settlement of all ATM transactions on the network.The company has also launched a local debit card program (branded as SCT™) to enable banks to issue cards to customers at a fraction of the costs typically associated with inter-national card schemes. The local debit card program offers a first-time opportunity for banks to issue and manage a local debit card program, with wide acceptability (due to the ATM & POS Network in Nepal and India and regional countries at a subsequent date). In addition, the company also provides a secure facility for Card and PIN production & management, customized for each bank. This facility is equipped with world standard Hardware Based Encryption (RACAL-HSM) supporting the latest (e.g. 3DES) encryp-tion standards. The project also includes integration of ATMs and POS banks may have already invested in, and enable them to recover their investments on a significantly accelerated basis. The technology used in this project is tried and tested in many sites overseas and consequently mitigates the risk of technology failure that is typically associated with new technologies.

2. VISA Electron

Visa Electron is a debit or credit card available across most of the world, with the exception of Canada, Australia, Ireland and the United States. The card was introduced by VISA in the 1980s and is a sister card to the Visa Debit card. The difference between Visa Electron and Visa Debit is that payments with Visa Electron require that all the funds be available at the time of transfer, i.e., Visa Electron card accounts may not be overdrawn. Visa Debit cards, on the other hand, allow transfers exceeding available funds up to a certain limit. Some online stores and all offline terminals (like on trains and aircraft) do not support Visa Electron because their systems cannot check for the availability of funds.

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3. VSAT

A Very Small Aperture Terminal (VSAT), is a two-way satellite ground station antenna with a dish antenna that is smaller than 3 meters. The majority of VSAT antennas range from 75 cm to 1.2 m. Data rates typically range from 56 Kbit/s up to 4 Mbit/s. VSATs access satellites in  geosynchronous orbit to relay data from small remote earth stations (terminals) to other terminals (in  mesh configura-tions) or master earth station "hubs" (in star configurations).

4. Data Encryption Standard(DES)

The Data Encryption Standard (DES) is a block cipher (a form of shared secret encryption)

that was selected by the National Bureau of Standards as an official Federal Information

Processing Standard (FIPS) for the United States in 1976 and which has subsequently

enjoyed widespread use internationally. It is based on a symmetric-key algorithm that uses a

56-bit key. The algorithm was initially controversial with classified design elements, a

relatively short key length, and suspicions about a National Security

Agency (NSA) backdoor. DES consequently came under intense academic scrutiny which

motivated the modern understanding of block ciphers and their cryptanalysis.

DES is now considered to be insecure for many applications. This is chiefly due to the 56-bit

key size being too small; in January, 1999, distributed.net and the Electronic Frontier

Foundation collaborated to publicly break a DES key in 22 hours and 15 minutes. There are

also some analytical results which demonstrate theoretical weaknesses in the cipher, although

they are infeasible to mount in practice. The algorithm is believed to be practically secure in

the form of Triple DES, although there are theoretical attacks. In recent years, the cipher has

been superseded by the Advanced Encryption Standard (AES). Furthermore, DES has been

withdrawn as a standard by the National Institute of Standards and Technology (formerly the

National Bureau of Standards).

5. Electronic Fund Transfer(EFT)

Electronic funds transfer or EFT refers to the computer-based systems used to

perform financial transactions electronically. An EFT is the electronic exchange or transfer

of money from one account to another, either within the same financial institution or across

multiple institutions.

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References

http://www.kistbank.com/

http://www.standardchartered.com/np/

http://en.wikipedia.org/wiki/Automated teller machine

Bibliography

Suraj bhattrai and group “Report on Automated Teller Machine of Nepal Investment Bank Ltd"

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