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E-banking benefits

E-banking serves several benefits to any societies which are summarized as: From the banks view point, the first benefits for the banks offering e-banking services is better branding and better responsiveness to the market. Those banks that would offer such services would be perceived as leaders in technology implementation. Therefore, they would enjoy a better brand image. The other benefits are possible to measure in monetary terms. The main goal of every company is to maximize profits for its owners and banks are not any exception. Automated e-banking services offer a perfect opportunity for maximizing profits. The main benefit from the bank customers point of view is significant saving of time by the automation of banking services processing and introduction of an easy maintenance tools for managing customers money. The main advantages of e-banking for corporate customers are as follows (Guru, 2002). Reduced costs in accessing and using the banking services. According to their idea the main benefits of e-banking are as follows: 1) 2) 3) Increased comfort and timesaving transactions can be made 24 hours a day, without requiring the Quick and continuous access to information. Corporations will have easier access to information as, Better cash management. E-banking facilities speed up cash cycle and increases efficiency of business physical interaction with the bank, without requiring the physical interaction with the bank. they can check on multiple accounts at the click of a button. processes as large variety of cash management instruments is available on Internet sites of banks. 4) Private customers seek slightly different kind of benefits from e-banking. In the study on online

banking drivers Aladwani (2001) has found, that providing faster, easier and more reliable services to customers were amongst the top drivers of e-banking development. The main benefits from e-banking for private customers are as follows (BankAway, 2001): 1) 2) 3) 4) Reduced costs: This is in terms of the cost of availing and using the various banking products and Convenience: All the banking transactions can be performed from the comfort of the home or office or Speed. The response of the medium is very fast; therefore customers can actually wait till the last Funds management. Customers can download their history of different accounts and do a what-if services. from the place a customer wants to. minute before concluding a fund transfer. analysis on their own PC before affecting any transaction on the web. This will lead to better funds management.

Short term Benefits: Reduce extra time; Increase productivity and efficiency; Eliminate duplication and wastage; Cut down maintenance, and shortage cost; Curtail security cost. Long-term benefits: Create new opportunities of jobs for jobless; Participate in the countrys economic health; Proper planning and monitoring; Proper use resources. Job creation: According to Bangladesh Bureau of Statistics, the number of unemployed people in Bangladesh in 1990-01 was 1.0 million. Among them 0.2 million are male and 0.8 million female, at the rate of unemployment is 1.1 which is extended 1.9. The issue of computers eliminating jobs of people is quite emotional and painfully real. But it has two sides that automation will eliminate certain types of job like record keeper and also create jobs like administrator, system analyst, programmer, operator etc. and help to reduce unemployment problem.

Contribution to GDP: Banks with a national economy, work towards building national capital, increasing national savings and mobilizing investments in trade and industry. The impact of the New Economy on the entire economic growth has been studied in several research projects. For example Pohjola (2002) shows, that the contribution of the use of information communication technology to growth of output in the Finnish market sector has increased from 0.3 percentage points in early 1990s to 0.7 points in late 1990s. However, unlike the US, there has been no acceleration in the trend rate of labor productivity in Finland. According to the recent research conducted in Estonia (Aarma and Vensel, 2001), bank customers use bank office services on average 1.235 times per month, and wait in queue in bank office on average for 0.134 hours. In nutshell, E-banking serves so many benefits not only to the bank it self, but also to the society at whole. Accordingly From banks perspective, e-banking makes finance economically possible: (1) Lower operational costs of banks Automated process Accelerated credit decisions Lowered minimum loan size to be profitable (2) Potentially lower margins Lower cost of entry Expanded financing reach Increased transparency

(3) Expand reach through self-service Lower transaction cost Make some corporate services economically feasible for society Make anytime access to accounts and loan information possible From society perspective E-banking business makes access to finance from banks attractive. Society have benefited from the development of E- finance and gradually stepped out of the informal sector. In particular, E- finance offers the following attractive benefits for society: Ease of use, Lower costs of financing, Convenience, Time savings, Operational efficiency. Other benefits include increased efficiency since automation enables you to do more with less input, increased level of output and employee satisfaction and motivation since they will not have to toil really hard. Larger market share through attraction of new customers and customer loyalty may be gained (Czerniawska and Potter, 2000). E-banking challenges: E-banking challenges identified from business related. Technological challenges are related to the acquisition, installation and maintenance of the necessary hardware and software. These challenges are Security and Web site issues (Koved et al. 2001); the organizations data may face threats from hackers and data loss occasioned by things like viruses. Hackers may also proliferate bank system to transfer money from one account to another and this may make both the bank customers and the bank itself to lose huge sums of money. This may prove costly to the organization i.e. in their prevention Czerniawska & Potter, 1998; Alexander, 1998). Technology issues including costs, software and infrastructure; an e-banking system requires great expenditure in monetary terms. Others are Managerial challenges and include people and organizational issues; the people in the organization may resist adoption of the new technology as they may fear that it would lead to loss of jobs. They may also be reluctant to adopt new methods as they may fear change. Another thing to consider is that, we may need to restructure the organization and this may be a challenge in it self (Hoffman et al. 1999; Feeny 2000). Obtaining senior management backing: every major activity in the organization needs to have management support. A supporting management will provide the necessary resources. If the management does not support the e-banking project, it means that the project will lack the necessary resources and is thus bound to fail. (Feeny 2000). Business challenges include customer service where the bank will lose the personalized service that it offered its customers. When this personal feel is lost, customer loyalty may be reduced or entirely lost (Whinston et al. 1997; Alter, 1999; Lee 2001).Customers old habits; customers may stick with the old habits and may not be ready to adopt the literature are classified as technological, managerial, and

change. They may even lack trust for the new technology and hence our e-banking 0r e-commerce system may be under-utilized (Schwartz, 1999). Legal issues may arise from the adoption of e banking. The organization may be sued because of a loss suffered from the failure of their system. Again, the organization may find itself facing new kinds of legislations which are continuously being enacted by the governing bodies, in this case the CBK (Lawrence et al.1998; de Souza &Von Wiese 2000). The macroeconomic challenges But the challenges are not limited to regulators. As the advent of e-banking quickly changes the financial landscape and increases the potential for quick cross-border capital movements, macroeconomic policymakers face several difficult questions. If electronic banking does make national boundaries irrelevant by facilitating capital movements, what does this imply for macroeconomic management? How is monetary policy affected when, for example, the use of electronic means makes it easier for banks to avoid reserve requirements, or when business can be conducted in foreign currencies as easily as in domestic currency? When offshore banking and capital flight are potentially only a few mouse clicks away, does a government have any leeway for independent monetary or fiscal policy? How will the choice of the exchange rate regime be affected, and how will e-banking influence the targeted level of international reserves of a central bank? Can a government afford to make any mistakes? Will the spread of electronic banking impose harsh market discipline on governments as well as on businesses?

The answers to these questions fall into two emerging strands of thought. First, the technological revolutionparticularly the expansion of electronic money but also, more broadly, electronic advances in banking practicescould result in a decoupling of households' and firms' decisions from the purely financial operations of the central bank. Thus, the ability of monetary policy to influence inflation and economic activity would be threatened. Second, as electronic banking expands, financial transaction costs can decline significantly. The result would be tantamount to a reduction in the "sand in the wheels" of the financial sector machinery, making capital flows even easier to effect, with a potential erosion of the effectiveness of domestic monetary policy. Regards M M Mustafiz Munir MANAGER, RECOVERY DIVISION BASIC Bank Ltd. Dhaka