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Assignment on

The current status and the prospect of E-

banking in Bangladesh
Executive Summary
E-Banking is web-based Banking. Now a day due to emerging global economy, e-commerce and e-
business have increasingly become a necessary component of business strategy and a strong catalyst for
economic development. As a third world developing country, Bangladesh is far behind to reach the
expected level of global banking system. At present the banks in Bangladesh are using the limited
electronic banking services. E-banking product and services include wholesale products for corporate
customers as well as retail and fiduciary products for individual customers. Foreign commercial banks
and private commercial banks are relatively in a better position to provide on line banking services.
Dutch bangle bank is acting as a pioneer in this sector. Customers who are habituated with online
banking thinks that online banking services are relatively good then manual system, but they not
satisfied with the quality of services and bank personnel behavior to that extent. Although E banking
activities are experiencing lots of limitation and constraints such as lack of awareness and human
capital, inadequate infrastructure, this sector has a high prospective. People are now getting interested
in online transaction and government has laid out some plans for developing ICT infrastructure.
Bangladesh bank take some major initiative in this regard and nationalized bank should concentrate in
improving their online services spread and quality.

Table of Contents

Section Contents Page

1 Introduction 6
2 Overview on E banking 10
Economic aspects of E banking
3 Present status of E banking in Bangladesh 13
3.1 Product and services available in BD 14
3.2 Customer response 16
3.3 Dutch Bangla bank Ltd. as a pioneer 21
3.4 Comparative analysis among 5 banks 28
3.5 Findings and analysis 34
4 Problems and prospects of e banking in BD 35
4.1 SWOT analysis 36
4.2 Limitation and constraints of e banking in 38
4.3 Prospect of e banking

5 Potential policies and implication 42

6 Summing up 44
7 Bibliography 45

1.1: Objective of the Study

There are several objectives to conduct the study. These are:

To fulfill the partial requirement of the E commerce and E banking (F-404) course
offered in BBA program in 14th batch.
To gather adequate knowledge about present status, problems and prospect of E
banking in Bangladesh.
Enhance individual performance.
To improve our skills on report writing.
To meet the curiosity in this stated subject.

The information for the report was collected from secondary sources.

Secondary data has been collected from various publications and survey reports.
We use sampling for analyzing current status of E banking in Bangladesh. For this
purpose we use stratified sampling. Our sampling consists of five bank from three
different sectors of private commercial bank, foreign bank and nationalized bank.

Dutch bangle bank limited Private commercial bank

Eastern bank limited Private commercial bank
Dhaka bank limited Private commercial bank
Standard chartered bank limited foreign bank
Sonali bank limited nationalized bank

source of data

We collected our data from websites of the mentioned bank and various survey report and other

1.5: Limitations

Every study has some limitations. We faced some usual constraints during the completion of
our report. The major limitations are:

Lack of experience acted as constraints in the way of careful exploration on the topic.
Busy working conditions.


Overview on E banking

E banking
The term Internet Banking or E-Banking Internet both are used as supplement. E-Banking is the one of
the major part of E-Financing. E-Banking is web-based Banking. In other words E-Banking refers to the
banking operations, which is done over World Wide Web. However, more comprehensive and well-
established definition is given by the United Nations Conference on Trade and Development (UNCTAD).
This definition covers almost all area of E-Banking.

Internet banking refers to the deployment over the Internet of retail and wholesale banking services. It
involves individual and corporate clients, and includes bank transfers, payments and settlements,
documentary collections and credits, corporate and household lending, card business and some others
(UNCTAD, 2002) .

E-Banking information architecture is modeled as client-server architecture. A client operating through a

PC linked to Internet opens the special E-Banking site of his bank and then, using a set of special secure
numbers, gets access to his bank accounts and has the opportunity to consult them, as well as to make
all necessary payments and transfers from his personal accounts. When the transaction number is
exhausted the bank sends him a new set of numbers for his individual transfer sessions. In some cases
the bank provides customized software. The bank software program can also be utilized offline, for
example for preparing the payment orders offline and then making the actual order online. The client
receives all numbers separately, mainly by mail. The bank also provide clients with similar facilities in its
premises so that clients can use the bank equipment such as an ATM or a special facility linked to the
main terminal facility called Multimat, permitting them to effect the same account examination,
payment and transfer operations without consulting the bank staff.

Now a day due to emerging global economy, e-commerce and e-business have increasingly become a
necessary component of business strategy and a strong catalyst for economic development. The new
information technology is becoming an important factor in the future development of financial service
industry, and especially banking industry.

Economic Aspect of E-Banking In
Advantages of e-banking in Bangladesh:

There are a substantial number of educated unemployed youth forces, with ability to read and write
English exist in the country. They can be trained within a required skill in a short time.

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:

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.

Benefits from the banks point of view:

From the banks view point, the first benefits for the banks offering e-banking services is better
branding and better responsiveness to the market. 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.

Benefits from the customers point of view:

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 benefits of e-banking are as follows: Increased comfort and timesaving-transactions
can be made 24 hours a day, without requiring the physical interaction with the bank.

Quick and continuous access to information. Corporations will have easier access to information
as, they can check on multiple accounts at the click of a button.
Better cash management. E-banking facilities speed up cash cycle and increases efficiency of
business processes as large variety of cash management instruments is available on Internet
sites of banks.
Private customers seek slightly different kind of benefits from e-banking.
Reduced costs: This is in terms of the cost of availing and using the various banking products
and services.
Convenience: All the banking transactions can be performed from the comfort of the home or
office or from the place a customer wants to.
Speed. The response of the medium is very fast; therefore customers can actually wait till the
last minute before concluding a fund transfer.
Funds management. Customers can download their history of different accounts and do a
what-if analysis on their own PC before affecting any transaction on the web.

Economical benefits:

E-banking serves so many benefits not only to the bank itself, but also to the society as a whole. E-
banking makes finance economically possible:

I. Lower operational costs of banks

II. Automated process
III. Accelerated credit decisions
IV. Lowered minimum loan size to be profitable.

Potentially lower margins:

I. Lower cost of entry

II. Expanded financing reach
III. Increased transparency.

Expand reach through self-service:

I. Lower transaction cost

II. Make some corporate services economically feasible for society
III. Make anytime access to accounts and loan information possible.

Chapter Current Status of E
03 banking in Bangladesh

Present status of e-banking in
As a third world developing country, Bangladesh is far behind to reach the expected level of global
banking system . According to a report published in The Daily Star (4th April,2010) Bangladesh ranked
118th in the global Network Readiness Index in 2009-10 up from 130th a year ago, showing an upward
trend in the information and communication technology sector.

Banking industry in Bangladesh

Total numbers of Banks in Bangladesh are forty seven. Banking sector in Bangladesh on the basis of
utilization of electronic devices can be subdivided into three groups

I. Foreign Commercial Banks and Private Commercial banks especially 2nd(except few banks) and
3rd generation Private Banks :Fully Online banking;
II. 1st generation private banks and some 2nd generation Private Commercial Banks: Medium
range Online banking system ;
III. Nationalized Commercial Banks , Specialized Banks and Few foreign Bank branches of this
subcontinent :Low grade online banking system.

At present the banks in Bangladesh are using the limited electronic banking services. It is expected that
bank can attain more profit and offer better services to its customers by, introducing on line banking

Online banking practice in foreign banks:

The foreign commercial banks operating in Bangladesh like Standard Chartered Bank , Citi Corp. N.A. and
the HSBC are the pioneers to introduce the electronic banking facilities. They provide ATM, Debit Card,
Credit Card, Home Banking, Internet Banking, Phone Banking, on line banking etc. services

Online banking practice in indigenous banks

Among the indigenous banks, the Private Banks are ahead of the public banks. Prime bank ltd. , Dhaka
bank ltd., BRAC bank ltd., Dutch-Bangla bank ltd. , Eastern and Mercantile bank ltd., are already stepped
on towards electronic banking facilities. Apart from these banks, Mutual Trust Bank ltd., also
introduced ATM service. Among the four Nationalized Commercial Banks (NCBs), Janata bank ltd., has
some access to the electronic banking facilities. Bangladesh Bank, the Central Bank of Bangladesh, is also
trying to formulate the wide structure of electronic banking facilities. All of these private banks offering
limited on line banking services. Most of these banks only offer services by providing ATM card. Most of
them do not offer wide range of internet banking facilities which is the main advantages of e-banking.
Can deposit money in any branch and withdraw money from ATM machine- is treated the best e-
banking facility available in Bangladesh While electronic money transfer starts in a limited edition. Sonali

and Agrani bank ltd., is also providing on line banking services in a limited scale. Rupali Bank ltd. is also
developing on line banking. BASIC bank which is 100 percent public owned but served as private sector
banking has a technological advancement.

E banking software supplier:

Local software companies have been starting competition to supply useful complete banking software
with all the basic features of banking module. However, many forms of electronic banking services are
not possible to offer in Bangladesh at this moment due to the technology backwardness, infrastructural
underdevelopment and legal infrastructure.

Bangladesh banks stand in connection to E-banking:

According to the report published in The Financial Express(3rd November,2009) Bangladesh

Bank gave the ground breaking directives to commercial banks through a circular issued on 2nd
Novemebr,2009, saying that from now on their clients can pay power, water, gas and phone bills
from bank accounts and transfer funds within a bank or to other banks.
The central bank said that online payments will be treated like any other cash transaction
although it reminded the banks that these money transfers would be regulated by the country's
strict Anti-Money Laundering Act.
Meanwhile, Bangladesh bank started Automated 11Clearing house on trail basis from 8th
November, 2009.Bangladesh Bank also declared that the clearing house wont accept any
cheque from 1st April 2010 if size of the cheque is not as per the guideline of the MICR system.
But in developed nations MICR procedure is now replaced by more sophisticated procedure
such as cheque truncation process.

The country had only about 400,000 credit card holders at the end of June last year, according to
Bangladesh Bank Payments and transactions by credit cards were nearly Tk11 billion in June 2008 ---
one of the lowest in the world.

In Bangladesh digital divide among the Dhaka city and rest of the country is conspicuous. E-business as a
whole is confined among very few business organizations and on line banking business is expediting
process of the e-business of the country.

E-banking product available in
E-banking product and services can include wholesale products for corporate customers as well as retail
and fiduciary products for individual customers. Ultimately the product and services obtained through
internet banking may mirror product and services offered through other bank delivery channels. A brief
description of e-banking products are described below

Automated teller machine:

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

financial institutions customers with a method of financial transaction in a public space without a need
for a human clerk or a bank teller.

Debit card:

A debit card is a plastic card which provides an alternative payment method to cash. While making
purchases. The amount of a transaction is typically displayed on a card reader, after which the customer
swipes the card and enters the pin number. There is usually a short delay while the EFTPOS (electronic
fund transfer at point of sale) terminal contact the computer network (over a phone line and mobile
connection) to verify the authorize the transaction.

Credit card:

A credit card is a system of payment named after the small plastic card issued to users of the system. A
credit card is different from a debit card in that it does not remove money from the users account after
every transaction. In the case of credit card the issuer lends money to the customer. It is also different
from a charge card though this name is sometimes used by the public to describe credit cards. This
requires the balance to be paid in full each month. In contrast the credit card allows the customer to
revolve their balance at the cost of having interest charged.

Credit card facility fully can not be extended in the country, as common gateway between financial
institutions can not be established. Pricing mechanism of the products of country is not competitive,
rater it is very much volatile. This creates a negative impact on the customers.

Point of sale (POS):

This means a retail shop or a checkout counter in a shop or a variable location where a transaction
occurs in this type of environment. Additionally point of sale sometimes refers to the electronic cash
register system being used in an establishment. Point of sale system are used in restaurants, hotels and
stadiums as well as retail environment in short , if something can be sold, it can be sold where a point of
sale system is in use.

Check Truncation:

This is such a service in which a financial institution doesnt return the rejected checks with the monthly
statement to their customer, rather they provide statement of rejected checks with their monthly
statements. The banks store the rejected checks for a certain time period (usually 90 days). During this
time period a customer can adjust /rectify the account if any imbalance is found between his own
record and the bank statement provided by the bank. After the expiration of the stipulated period the
rejected checks are spoiled and the bank maintains a micro film copy for a period.

Home banking:

At first bank introduced telephone bill payment (TBP) so that customer could be able to do their banking
activities from their home. The next version for the home banking was Video Home Banking (VHB). The
internet is expected to be a major factor for home banking.

Retail Automated Clearing House Service:

It is an electronic network for financial transaction. ACH process large volume of both credit and debit
transactions which are originated in batches. ACH credit transfers including direct deposit, payroll
payment and payments to contractors and vendors. ACH debit transfers including customer payment of
insurance premiums, mortgage loans and other kinds of bills. Businesses are also increasingly using ACH
to collect the customers online rather than accepting credit or debit cards.

Wire transfer:

Wire transfer is a process which ensures fast and appropriate timing of fund transfer from the sender to
the recipient. This kind of transfer of money could be either within the country or abroad. Funds are
transferred under the following network:

FED wire ( federal reserve communication system)

Bank wire
CHIPS (clearing house interbank payment service)
SWIFT ( the society for worldwide interbank financial telecommunication) :

M remittance

For sending foreign remittance four nationalized banks and fifteen private banks are working
collaboratively with mobile phone service operators. Recently remittance could be sent in Bangladesh
by banking channel through account transfer (normally takes 3 working days) or in the form of instance
cash (takes 24 hours). Foreign resident people can send their money and PIN (personnel identification
number) through mobile phone. As a result money transfer becomes relatively easy, quick and hassle
free. But this system also superseded by mRemittance system. Mobile remittance service or
mRemittance was introduced in the country opening doors to millions migrants workers to help transfer
their hard earned money easily, effectively and most importantly ,swiftly. The first ever remittance

service for Bangladesh was jointly launched by two local banks Dhaka Bank ltd. and Eastern Bank ltd.
and the countrys second largest mobile operator ,Banglalink.

Security measures of e-banking:

The security of a system is the extent of protection against some unwanted occurrence such as the
invasion of privacy, theft and the corruption of information or physical damage. At this system is
developed through the internet there is a big chance of hacking through our system. Current browsers
counter security threats with a network communication protocol called secured sockets layer (SSL). SSL
is a set of rules that tells computers the step to take to improve the security level of the communication.

Corporate automated clearing house:

The automated clearing house (ACH) is an electronic network for financial transaction. ACH processes
large volumes of both credit and debit transactions. Which are originated in batches other retail and
fiduciary products and services may include balance inquiry, funds transfer, downloading transaction
information, bill presentment and payment, loan application, investment activity and other value added

Other E-banking services available in Bangladesh:

Core Banking
Cluster Banking
Phone Banking
SMS Banking
Various Cards
PC Banking
Banking KIOSK
Offline Branch Computerization E-payment

The credit card is available from VISA, MasterCard and VANIK. Some foreign banks provide electronic
fund transfer (EFT) services. It is at an early stage and used on a very limited scale. Microchips
embedded Smart Card is also becoming popular in the country, particularly for utility bill payment.
Automated teller machine (ATM) is expanding rapidly in major cities. A group of domestic and foreign
banks operate shared ATM network, which drastically increase access to this type of electronic banking
service. The network will gradually be extended to other parts of the country.

Customers Response:

Out of five hundred customers who have been using on line banking system, following results have
been gathered from the questionnaire through using snowball sampling technique. In following table
Customers Response who have been using on line banking system (% of Respondents who expressed
Yes comment) is presented.

Comment Dhaka(In Chittagong(In

percentage) percentage)
On line Banking services is relatively good than 79% 65%
manual system
On line banking provides good Customer service 72% 61%
Just in time services in Banking can be provided 56% 48%
Bank Personnel behave properly 52% 56%
Dealing officer is well conversant about their 48% 47%
respective Desk work
Technologically improved but quality of banking 51% 44%
services worsen off
Better E-business environment 67% 61%

On line Banking services is relatively

good than manual system
16% 19%
On line banking provides good
Customer service
Just in time services in Banking can be
17% provided
11% Bank Personnel behave properly

13% Dealing officer is well conversant about

their respective Desk work
Technologically improved but quality of
banking services worsen off
Better E-business environment

Some major reason of customer dissatisfaction

ATMs fall short of money

Slow bandwidth of internet may delay the transfer rate. (radio link and cable are used for
Bankers make delay to provide PIN number whenever client lose his
Credit or Debit card
Charges are higher for the card.

This survey result demonstrate that people thinks that online banking services are relatively
good then manual system, but they not satisfied with the quality of services and bank
personnel behavior to that extent.

Dutch Bangla Bank Limited as a pioneer
Number of branches 96 branches
Number of customers 1.50 million
Number of ATM 1295
Number of fast track 50

Core Banking Software:

The truly online core banking software, Flexcube has been running since 2004. To ensure
better customer service, the bank is upgrading its core banking software from its present version to
Flexcube Universal Banking Solution (UBS). In parallel, the whole setup of hardware is being
upgraded to cope with the increased volume of transactions from different delivery channels.
The core team formed in this regard are working day-night in configuring & testing of the new
system which is expected to go live soon.

Oracle FLEXCUBE Core Banking

Oracle FLEXCUBE Core Banking helps banks overcome the challenges of intense competition, reduced
margins, and increased customer expectations by creating a unique competitive advantage built upon
improved profitability and an extended customer reach.

With Oracle FLEXCUBE Core Banking, banks gain a cost advantage through straight-through processing
and exception handling. In addition, the solution supports regulatory requirements in key markets
through a highly secure data management system, which can easily integrate with third-party solutions
at your bank.

Working in concert with Oracle Industry Reference Model for Banking, a comprehensive repository of
industry-specific processes, Oracle FLEXCUBE Core Banking's application architecture supports agile and
business processes management using Business Process Execution Language (BPEL), service-oriented
architecture (SOA), and a Web services-based model. It enables integration of all third-party
applications, including in-house banking software, to facilitate simple and complex business processes.


24/7 processing of large transaction volumes, with high availability

Multiple delivery channel support, including branches, ATMs, point-of-sale terminals, call
centers, mobile devices, and internet banking
An XML Web-based user interface with context-sensitive help
Security management covering application and role-based access
Online validations and automated exception processing
Centralized, decentralized, and combination deployments
Ease of integration with existing systems using flexible Java Platform, Enterprise Edition

Operational risk management controls, including limits, collateral, and nonperforming assets

Upgradation of Switching Software

A remarkable percentage of transactions of DBBL are performed using the most popular
delivery channel ATM. As such, it is equally important to have a strong switching software to
handle different types of transactions as well as high volume of transactions. Considering this,
the bank is upgrading its switching software too. The upgraded software will not only ensure
better and quick response to the requested transactions, it will also be capable to handle EMV

EMV Issuing & Acquiring

All the ATMs and POS terminals of DBBL are EMV-compliant. The EMV security policy has been
introduced by Europay, MasterCard and VISA jointly to protect capturing card data and duplication of a
card. We are the first Bank in Bangladesh to ensure such security to our valued customers. DBBL has
introduced EMV compliant chip based Mastercard cards and VISA Cards for the first time in
Bangladesh which is the most secure card in the world. EMV compliants and accepts the following

EMV compliant chip cards of all the banks in the world;

Non-EMV Visa & MasterCard cards of all the banks in the world;
DBBL's proprietary cards (Nexus).

It took 3 years for DBBL to implement what Visa and MasterCard both deem as the future card standard.
It encompasses the digital age and the new technologies that have emerged in the electronic age. Visa
and MasterCard both realized that the normal card is 40 years old and the amount of fraudulent
transactions were loosing customers billions. North America will be have NexusPRO card compliant by
2016. But now DBBL already the only fully NexusPRO compliant and certified. DBBL's entire
infrastructure (including ATMs) have had a costly upgrade to enable NexusPRO to Bangladesh.

Brief Detail of How NexusPRO Works

Normal cards use a magnetic strip at the back of the card. The information and security on that
magnetic strip is stationary and does not change. Hence it can be easily duplicated. But NexusPRO's
processor uses its processor to fully digitally lock all the information. It prevents the information from
being copied as the processor 'generates' security codes rather than store it. It is a form of encryption.

But NexusPRO goes even further. Visualize a series of locks and keys. Every lock has a corresponding key.
customer account at DBBL has a digital lock, while your NexusPRO card is a digital key to access it. When
a fraudlent card tries to access your account, DBBL knows that the correct digital key is not presented
and denies access. Further more, DBBL replaces the account lock every second. But because a genuine

NexusPRO card can generate the correct key using the processor, it can access open the account lock at
that very moment. The next instance DBBL changes the account lock again, and your NexusPRO card has
to generate the key again using its unique processor.

The NexusPRO system also prevents one NexusPRO card from accessing another NexusPRO card. This is
because all processors are unique. All NexusPRO cards generate keys differently and DBBL is aware of all
the differences and knows which card is which so they can access only their authorized accounts.
However this was just a brief overview how your NexusPRO card works. The detailed workings are more
secure and even more revolutionary.

Mobile ATM Booth

DBBL has put its level of innovation and standard of customer support to a new height by setting
another milestone in the history of banking sector by adding two units of Mobile ATM booths to its
existing ATM network. DBBL has become the first bank in the country to provide such unique service
and convenience to the customers. The DBBL Mobile ATM Booth, which is outfitted in a custom-made
van, is available anywhere anytime and allow customers to deposit cash / cheque, withdraw cash,
inquire account balance, print mini statement, pay utility bills and to access all other services offered by
a standard ATM.

Mobile Banking
Around 87% of the total population of Bangladesh is un-banked. To bring such a huge population into
the banking channel, DBBL is implementing a system to launch mobile banking soon. The project is in its
final stage now. With this facility any person having a mobile number will be able to use his number as a
bank account. In this mobile account they will be able to do the following:

Cash deposit to any Agent of DBBL

Cash withdrawal from any Agent of DBBL
Cash withdrawal from DBBL ATMs
Funds transfer to another mobile account
Utility bill payment, Tuition fee payment, Air time top-up.
Receive remittance from home and abroad
Salary disbursement
Disbursement of Govt. allowances
Merchant Payment
Balance Inquiry

Automated Teller Machine (ATM)

Customers get various types of services in these ATM booths like:

1. Cash Withdrawal

2. Balance Inquiry

3. PIN change

4. Fund Transfer (within Accounts)

5. Mini Statement

6. Cheque Book Request

7. Statement Request

8. Bill Payment for

DBBL Credit Card

Bangla Link
Alico Premium
Electricity Bill etc.

Customers of other Banks can enjoy the DBBL ATM facilities with some conditions. The Banks connected
with DBBL ATMs are:

1. Southeast Bank
2. The City Bank
3. United Commercial Bank
4. Standard Bank
5. National Credit & Commerce Bank
6. Bank Asia
7. Mercantile Bank
8. Trust Bank
9. Mutual Trust Bank
10. First Security Bank
11. Dhaka Bank
12. AB Bank
13. IFIC Bank
14. Janata Bank
15. Jamuna Bank
16. Eastern Bank
17. Pubali Bank
18. Sonali Bank

In the month of December, 2010 the total number of Cash withdrawal from ATMs was 230 million and

Almost 1.74% of total withdrawals was from ATMs

the corresponding amount of withdrawal was Taka 13.20 billion.

Fast Track
To provide uninterrupted quick and faster service, the Bank has introduced Fast Tracks (FT) in the
country. These FTs are comprised of several ATMs, Deposit Kiosks and Customer Service help
desk officers. The customers have the faclity to deposit cash or cheque, withdraw cash, pay utility bills
etc at the FT. DBBL has setup 50 FTs within 6 months of introducing it.The activities of FT are
summarized below

1. Cash Withdrawal:
2. Cash Deposit.
3. Account Opening
4. Customer Request Form

A list of such services is given below:

I. Customer's request form for Account Transfer

II. Cardholder's Request form for a new Debit Card (MasterCard Debit / Maestro / Visa Debit/Visa
Electron) or Credit Card (MasterCard / Visa)
III. Request form for Replacement of a Card (Debit/Credit) for any of the following reasons:
IV. Request for re-issue of PIN. Re-issue of PIN may be requested by a customer who have forgotten
his PIN or in the fear that his PIN may be compromised to another person.
V. Request for Account LinkageAuto debit
VI. Request form for refund of Cash not dispenses from ATM but account debited.
VII. Application form for availing Internet, SMS & Alert facility on bank account
5. Delivery of Captured Card

Electronic banking for businesses:

Dutch-Bangla Bank offers a complete electronic banking facility for companies around the clock. Most
multi-nationals use this service because it is advanced, secure and affordable. DBBL creates a custom
banking service to suit any business of any size. The services have a wide range that includes cash flow
services, distribution banking and salary accounts. If a company knows what type of custom and tailored
banking service they need, DBBL can provide it instantly and at minimal cost (usually free of charge).

DBBL has created Employee Banking program which allows:

Seamless and error free distribution of salaries

Providing emploees with timely salary payments
Lower manpower needed
Reduces cash theft and misapporpriation
Transactions are properly logged for your easy reference
Highly secure way of distributing money
No cash at hand in the office, all cash finally distributed through the largest ATM network in

Electronic Student Booth (ESB)

This is another innovative banking offered by DBBL. The booths will mainly be setup in
educational institution campus or nearby locations. The booths will contain ATM and deposit kiosks
where the customers & students can withdraw & deposit money and pay tuition fee for
the institute. In addition to these, there are multiple computers with internet connectivity which
can be used by the students for accessing DBBL internet Banking facility. DBBL has setup its
first ESB at Eden Girls' college, Dhaka. Many ESB are in the pipeline.

Internet Payment Gateway (IPG)

DBBL again has been the first bank in the country to have an Internet Payment Gateway. With the
help of this, any person in home or abroad can do financial transactions using DBBL's proprietary
cards/ MasterCard/ Visa credit. They can purchase goods and services from e-commerce web sites,
called e-merchants and pay bills online sitting at their office or home using a card.

Call center
Considering the growing number of customers, card holders & transactions, DBBL has setup a
Call center. It is a world renowned Cisco hardware-based call center comprising of all the services
a call center can provide, e.g, Interactive Voice Response (IVR) by virtue of which the customer will be
able to choose his options using the keypads of a cell phone and listen to the responses related to
his account or card or transactions from the system or though live agent. The customers can dial at
16216 from any land or mobile phone and go to IVR or Live agent, and get desired services.

Human Resource Management System & Remittance Management System

DBBL has developed a number of in-house software for its own requirements. The Information
Technology Division has successfully developed and implemented two such systems namely
Human Resources Management System (HRMS) and Remittance Management Systems (RMS).
The HRMS helps in maintaining all information of employees of DBBL while RMS helps in
managing and monitoring local and foreign remittances.

Implementation of Multi-factor Authentication for Internet Banking
DBBL is considering to offer some transactions through Internet banking which were not
possible due to security reasons. To cope with world's latest technology to provide transaction security,
DBBL is considering multi-factor authentication for some of such transactions like Third Party Funds
Transfer using Internet, e-commerce transactions and foreign remittance transfer from
overseas remittance houses to DBBL

Green IT
Dutch-Bangla Bank has always been careful about environment. DBBL has taken initiatives to make its IT
infrastructure as "Green IT". Environment friendly options like virtualization, power
management and proper recycling habits towards certifying our data centers as "Green" are under
our active consideration.

New Data Center and DRS

DBBL has set up its new data center and DRS to accommodate all the above setups. The DBBL's
data center is one of the most sophisticated data centers of the country equipped with state-of-the
art design, security and sophistication.

Internet banking facilities:

Account Summary
The Customer will be able to view the list of Current, Saving, Term Deposit and Loan accounts
with the current balance.
Account Details
The Customer can choose a particular account and see the account details including unclear
fund, limit, interest accrued etc.
Account Activity
The customer can see or print his transaction activity in a given account for a particular period.
Transfer Funds
The customer can transfer funds from one of his accounts to another of his accounts within the
Pay Bills
The customer can pay his utility bill (like Electricity, WASA, GAS, Telephone, Mobile, ISP etc.)
Standing Instructions
The customer can setup, modify or delete standing instructions for transferring fund from one of
his account to another account (his account or 3rd party).
Open/Modify Term Deposit
The customer can open a term deposit by transferring funds from one of his current or savings
accounts with the bank. He can also modify the TD and redeem / part-redeem it.

Loan Repayments
The customer can make payment of the loan installment from his CASA account.
Statement Request
The customer can make a request for account statement for a required period. The bank will
manually service this request.
Cheque Book Request
The customer can make a request for a Cheque book.
Cheque Status Inquiry
The customer can choose an account and enter the Cheque number for which the status should
be viewed.
Stop Payment Cheque
The customer can mark his Cheque leaf as stop payment.
Interest Rate Inquiry
The customer can query on the interest rates on CASA & Term Deposit Products.
Foreign Exchange Rate Inquiry
The customer can query on the Foreign Exchange (FX) Rates using this function.
Refill Pre-Paid Card
The customer can buy a refill number for his pre-paid mobile phone or ISP link.
Change Password
The customer can change his Internet Banking Password using this function.

Additional Internet Banking Features for Corporate Banking

Letter of Credit
The customer can initiate the LC application through Internet Banking.
Bank Guarantee
The customer can initiate the Bank Guarantee through Internet Banking.
Limits Query
The customer can view his Loan Limits and Limits Utilization through Internet Banking

Comparative analysis among five banks

For our analytical purpose we pick 5 banks from three different segments. One of the banks is DBBl
which is pioneer in online banking in Bangladesh. From other local commercial banks in Bangladesh we
pick eastern bank limited and Dhaka bank. From foreign banks we chose Standard Chartered Bank
Limited and Sonali Bank Limited from the public banks.

DBBL EBL Dhaka Bank Standard Sonali Bank

Chartered Limited

Number of 1295 74 24 48 22
Number of 96 49 54 25 1191
Number of 12 23 19 17 31
SWIFT code
Core Flexcube Oracle Flexcube eBBS
banking Flexcube UBS
Phone CISCO System IVR
SMS banking Flexcube Flexcube Flexcube O/S WAP
Internet Flexcube Flexcube Flexcube iBanking
Various Card Trans Master CARDPRO eCAPS
cards Suite(AIX, for
Oracle) Prepaid Credit
Debit Card
Shared ATM Tranzware,Compass

Internet banking facilities:

DBBL EBL Dhaka Bank Standard Sonali Bank

Chartered Limited
Bank Limited
Account X
Account X
Account X
Pay Bills X
Standing X X
Open/Modify X X
Loan X X

Statement X
Cheque Book X X
Cheque X X
Stop X X
Interest Rate X
Foreign X X
Rate Inquiry
Refill Pre- X X X
Paid Card

Cards and others:

DBBL EBL Dhaka Bank Standard Sonali Bank

Chartered Limited
Bank Limited
Debit card
Credit card X
Visa and X
master card
Travel card X X X


DDBL EBL Dhaka Bank Standard Sonali Bank

Limited Chartered Limited
Bank Limited
Mobile X
Fast Track X X
Electronic X X X
Booth (ESB)
Call center X X

New Data
Center and
Green IT
Online X X X X

Location of ATM:
Basis of comparison:

Metropolitical areas: Governed by City Corporations, these are the cities of Bangladesh. Such as:


Municipal areas: Governed by, Municipal Corporations, these are the towns in Bangladesh.

DBBL ATMs in cities DBBL location of

dhaka chittagong khulna rajshahi ATMs
shylet borishal rangpur
metropolitan area municipal area
3% 1%





EBL ATM locations Standard chartered ATM
cities towns locations
cities towns



SBL ATM locations DBL ATM locations

cities towns cities towns



percentage of ATMs cities to towns

Axis Title

cities 77% 96% 83% 87% 78%
towns 23% 4% 17% 13% 22%

Finding and analysis
Private commercial banks and foreign banks offer a broader E-banking services then state
owned banks.
Nationalized banks operate more branches having SWIFT code then foreign and private
commercial banks.
Private commercial banks and foreign banks use more updated banking software then
nationalized banks.
Foreign banks operate more ATMs in cities or urban area then private and nationalized banks.
All of the banks in our sample tend to have and establish more ATM booth in metropolitan areas
where population density is higher.

Foreign commercial banks and private commercial banks are relatively in a better position to
provide on line banking services.

Chapter Problems and
04 Prospects of E banking
in Bangladesh

SWOT analysis
As empirical evidence here a SWOT Analysis can be an effective measure. For analyzing the performance
of the Internet Banking in Bangladesh the following SWOT Analysis is considered:


Internet Banking is still to grow more in Bangladesh; most of the banks

are providing several services of E- Banking. Thus, this product will
1 enjoy the benefit of first mover.

It is cheap for both banks and customers; banks will be able to lower
overhead costs and make more profit out of it. Moreover, this requires
2 less man power for banks; customers can save time and avoid hassles.

E- Banking is convenient as the service is available all the tome at just a

click away.


The system may have a problem of security breakdown which

refers to the problem of indentification of customers who's
1 initiating transaction. As in Bangladesh

The transaction can only be cancelled via Internet while the

Internet infrustructure in our country is not satisfactory and
supportive to provide all time access to web. So, there comes
2 the problem in executing service with its full functionality.


Non- Branch Banking is becoming popular in Bangladesh; thus many

banks are offreing non- branch banking facilities. A person is able to
withdraw or deposit money in any branch of the bank he has account
1 with. Moving to E- Banking gives an edge in such cases.

All types of internet services are being appreciated and applied by

people ofdifferent walks as this eases the activities. So, such an
attractive offer package provided by E- Banking will be popular
2 everywhere very soon.


People have concern about security & privacy; htey like to fell money
with their hand; they actually don't believe in virtual money tranfer.
In the field of IT new technology is coming everyday. The one which is
very popular today might get obsolete tomorrow. So to have a
competitive edge over competitors the banks must always update their
2 services.

Despite the presence of online internet service in Bangladesh, its scope

is underutilized. The reasons include high service charges, lack of
awareness, poor telecomminucation systems, government policy, low
3 buying power of potential clients and lack of institutional support.

The strengths and weaknesses are the internal factors of the banks in operation of E- Banking
while the opportunities and threats are the external factors.

Limitation and Constraint of online

banking system in Bangladesh
Lack of awareness and human capital

E-business is still not very much progressed in Bangladesh. Mass awareness is not feasible. The country
faces problem of developing human-ware. Without preparing human capital at the level of international
standard, we cannot be able to compete in global market and successful e-business cannot be feasible.

Unsatisfying services and customer relationship

Nationalized commercial banks and specialized banks are lagging behind of on line banking services.
Moreover, customers are not satisfied with the quality of the services. They are not also very happy with
the behavior of the bank personnel. However, it reveals that e-business especially with the help of on
line banking can manage economy of Bangladesh in a far better way as customer relationship
management increases.

Unavailability of locally produced software

Local Banking software should be developed properly and must have greater accessibility within the
country and outside the country. Moreover, to produce hardware especially computer and its
accessories, local entrepreneurs are not taking any sort of strategic planning.

Erstwhile technology

Bangladesh Bank should adopt latest technology but due to lack of vision they are adopting old
technology i.e. introduction of MICR for Bangladesh Bank automation procedure. MICR system should
be substituted by cheque truncation system.

Numerous problems have been identified from the field survey on line banking system in Bangladesh.
Some of them are in the followings:

Inefficiency and inadequate knowledge of the bank management about the on line
Lack of proper Strategic plan to gain and retain market share of the indigenous banks.
Lack of international standard communication channel.
High cost of establishing on line banking system. Inadequate back and front office

Lack of integrated plan among the banks and the Central Bank authority.
Inefficient Clearing House Facilities.
Inappropriate software and less trust by the Bank authorities on local software.
Biased-ness of the management of bank towards foreign software.
Legal barriers and appropriate policy framework.

Limited number of online customer due to high cost

The number of customers taking banking services does not capable to bear the cost of additional
equipments like computer, computer accessories , Internet etc. from their own organization or at home.
Biometrics should be more strengthened. Using Internet facility still very costly and people has little
knowledge in operating computers. A few numbers of cyber caf is available but for banking purpose
customers do not feel safe to use these facilities. As a result total numbers of customers who are
habituated in on line banking systems are limited. In these circumstances investment for establishing e -
banking facilities seems profitless.

Financial risks

Although on line banking has bright prospects, it involves some financial risks as well. The major risk of
on line 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. Therefore, identification of relevant risks, and formulation and
implementation of proper risk management policies and strategy formulations and implementations
are important for the scheduled banks while performing on line banking system.

Prospect of e banking
The Bangladesh Railway owns a high-speed optical fiber network (1,800 km) parallel to the railway path
that covers most of the important parts of Bangladesh. This optical fiber network can be used as the
backbone network of e-banking in Bangladesh. For example, mobile phone operators such as Grameen
Phone and Ranks ITT of Bangladesh use this optical fiber network through which they reach even in rural
areas with their services (Islam 2005). It is encouraging that some of the FCBs and PCBs are already using
this optical fiber network for conducting online transactions, ATM and POS services.

Digital telephone exchanges have been established in 389 upazilas and 17 growth centres. Work is
underway to cover the rest of the upazilas under digital exchange system. Meanwhile, Bangladesh has
joined the information super-highway by connecting itself with international submarine cable system in

2006. A total of 159 Internet Service Providers (ISPs) have now been connected with this system of
which 64 are actively providing services. Internet connection is slow with bandwidth range 32 kbps to 56
kbps for dial up and 64 kbps to 8 mbps for broadband. Under this scenario, as a part of government
decision of building digital Bangladesh, the existing capabilities of ICT sector is likely to increase rapidly
in bringing all upazilas under internet services and this will contribute in widening the scope of e-
banking throughout the country.

The overall computer density in the banking sector is 1.64. For foreign commercial banks (FCBs) the
computer density is 45.34, where as for NCBs the ratio is only 0.41. The specialized bank scenario is
almost same as the NCBs, 0.43. On the other hand, private commercial banks have comparatively higher
ratio, 4.94. As a whole 81.81 percent bank does not have any local area network (LAN), 30 percent have
WAN (Wide Area Network) but for some banks many branches are outside of WAN connectivity. At
present, all foreign banks of our country are using online banking system; they are invested a lot for
their automation banking services. They are the pioneer of implementing electronic banking systems in
Bangladesh, but now most of the private banks of our country are using electronic banking systems. In
our country different banks are offering electronic banking services in different ways, some are offering
ATM (Automatic Teller Machine) services, some are tele-banking and some are electronic fund transfer,
debit card, credit card etc.

Recently, the governments emphasis on building a digital Bangladesh, setting up ICT park, raising
allocation for developing ICT infrastructure, waiving taxes on computer peripherals and other measures
including the automation program of banking sector led by the Bangladesh Bank and competition
among the scheduled banks in improving customer services have accelerated the prospects of e-banking
in Bangladesh.

Chapter Policy implication and
05 conclusion

Potential Policy implications
To implement e-business successfully in Bangladesh following recommendations are given below:

Successful team building and security system

Successful team building with a coherent manner for developing human ware, hardware, software and
web ware are required to increase e-business process in a systematic way. Moreover, greater emphasis
should be given on security system and to prevent fraud so that any sort of financial transactions
including on line banking payment or any other electronic fund transfer can be properly handled.

Definite career path for hardware and software engineer

Career path of hardware and software engineers should be properly designed. Otherwise professionals
will be de-motivated and they wont work with job satisfaction.

Adequate research work

Banks and business organizations especially corporate houses should have adequate research, skilled
manpower and technology driven strategies in this regard.

Initiatives to develop integrated e banking software

Initiatives to develop integrated e banking software through in house built may be taken. Preference
should be given by the bank authority to use local software over foreign software. Common gateway is
required so that interbank transactions can be feasible. Bank can charge normal profit to enlarge the
market size on the on line banking products. Banks should have their own strategic plans to implement
on line banking system. Creating awareness and consciousness among the clients of the banks are also

Infrastructure development

Internet penetration is a key factor for the growth of e-banking. Christiansen (2001) reports that
the take off phase of Internet banking needs at least 30 percent Internet usage among the
population. Moreover, since Internet penetration alone is not adequate for online banking
expansion, the government may provide subsidy for surfing cost, 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
framework and security are essential for flourishing internet banking.
VSAT operating license should not limit the bandwidth. Moreover, high bandwidth charge is
another constraint in widening internet access to a greater number of people. Therefore
rationalizing the charge could make the use of internet affordable to all.

New ISPs should be attracted into the business for promoting greater competition in the
More high-speed fiber optical data communication infrastructures should be well established for
speedy data communication for domestic and global high speed communication system. This
will help to attain better e-business including on line banking system. Competitive situation
should be arranged so that e-business management can be improved through efficiency and
effectiveness of customer services.
The policies relating to long distance and international voice traffic need review to remove
impediments to growth of e-commerce that relates e-banking as well.
As a part of building digital Bangladesh, measures are needed to improve existing ICT
infrastructure and address relevant issues including governance and institutional strengthening.
A package of required rules, acts, laws, and regulations pertinent to e-banking adoption and
development may be formulated. In this respect, lessons and experience of countries that have
already expanded e-banking can act as useful guides.
BTRC as a regulatory body should work with long term vision, mission and fulfillment of goal
oriented strategies. They should work as a facilitator rather not creating hindrance. VOIP should
be legalized after examining and finalizing proper rules and regulations in the country

The Bangladesh Bank may consider the following steps:

Take steps to orient bank officials on benefits of e-banking. For instance, BB may offer short
courses (e.g. using the Bangladesh Bank Training Academy) on e-banking including analysis of
costs and benefit from the perspectives of customers and the banks, present status, and
opportunities and challenges.
To avoid risks involved in e-banking, risk mitigation policies and strategies need to be adopted as
a part of the package approach to implementing e-banking.
Mobile banking is a prospective area for two reasons: it covers almost all activities involved in
retail banking; and mobile phone network has already been spread all over the country covering
more than 30 million people. Because of convenience, a sizeable share of the unbanked people
can be brought under the network especially in rural areas with flourishing mobile banking. In
this context, it is important to formulate relevant acts, policies, and adopt operative guidelines.

For the scheduled banks, it is important to:

review their business strategy and create the required space for adopting e-banking services in
order to remain competitive and attract new customers.
strengthen ICT department through providing training to IT personnel and procuring required
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 in basic ICT related matters in phases.

Technology has enabled the world to step into a new arena. To keep pace with advancing world it has
become imperative to adapt new technologies in business and banking sector. At present, Bangladesh is
trailing behind in acquiring the required quality of banking services to effectively compete in the global
market. Therefore, the banking system needs upgradation for which urgent measures are needed to
create a level playing field for rapid expansion of e-banking in the country. Despite the constraints, more
efficient use of existing capabilities in developing the services can pave the way to quality provision of e-
banking in Bangladesh.

I. Muhammad Mahboob Ali (2010). E-Business and on line banking in Bangladesh: an Analysis.
AIUB Bus Econ Working Paper Series, No 2010-03,
II. Mohammad Azizul Baten, PhD, E-Banking of Economical Prospects in Bangladesh, Journal of
Internet Banking and Commerce, August 2010, vol. 15, no.2
III. Md. Abdul Hannan Mia, Mohammad Anisur Rahman, Md. Main Uddin E-Banking: Evolution,
Status and Prospects
IV. Mohammad Mizanur Rahman, E-Banking in Bangladesh: Some Policy Implications
V. Websites of concerned bank