Online Bank Advantages and Disadvantages

Jump to: Advantages of Online Banking | Disadvantages of Online Banking | Types of Online Banking | Findings | SWOT Research of Online Banking | Banking Security Systems | Issues of Implementing Online Banking | Government Role in Online Banking | Recommendation | Conclusion

OVERVIEW On ONLINE BANKING

Information technology is among the most platform of banking all together, especially of online banking. Though this is an entirely new term for away country, because of the powerful competition its program is increasing rapidly. Now a day, it has become almost obligatory for the lenders to implement this. The web banking services that people are receiving now are limited to some extent in most cases. Nonetheless it is expected that in near future we will have the fullest service from online banking. We could also anticipating that the affect of online banking will be greatly upbeat for both clients and providers.

INTRODUCTION

E-Banking is thought as the robotic delivery of new and traditional banking products and services directly to customers through electronic digital and interactive communication stations.

Online banking (Internet banking) is a term used for accomplishing transactions, obligations etc. online by having a bank's secure website. This can be very useful, specifically for banking outside bank hours (which tend to be very brief) and banking from anywhere where access to the internet is available. In most cases a browser such as Internet Explorer or Mozilla Firefox is used and any normal web connection is suitable. It is an umbrella term for the procedure by which a person may perform banking trades electronically without browsing a brick-and-mortar establishment. With the help of E-Banking customers can access their banks without having to be literally present at the lender branch.

In Bangladesh the thought of online banking was conceived in 1996 however the commercial operation started in 2001. Bankers use a variety of services for Online Banking such as Computer banking, Home Banking, Electronic Banking or Internet Banking. These systems offer certain advantages over traditional banking methods.

Advantages of Online Banking

For Consumers:

  • The level of privacy of customers.
  • Online services are for sale to consumers a day daily during the entire week.
  • Customers might save time and attempts to do their finance transactions.
  • It will be easy for them to see all information they want clearly and simply.
  • Searching of any branch of a bank or investment company will be accessibly by online users.

For Banking institutions:

  • One way of appealing to more customers is to use their services.
  • Increasing the bank's reputation across the world is well known by many people.
  • It doesn't need to employ a lot of suffer or bankers to deal with customers straight.
  • Banks can offer simply with the branches across the world with one network.

Disadvantages of Online Banking

For consumers

  • Some people feel uneasy to provide their passwords or any type of information about their money over the internet.
  • Some websites might be difficult for consumers for the very first time to check on their financing.
  • It is possible for banking institutions to update their websites, which needs from consumers to type in again their data.
  • It is necessary to possess knowledge and skills on utilising the web.

For Banks

  • Banks may necessitate big sum of money to establish a site with attractive features.
  • They may lose their information if the network is harmed with other branches.
  • Hacking and viruses may cause problems for online banking, which could braking mechanism and damage the information.

Types of online banking

The common assumption is that Internet banking is the only path of online bank. However, this isn't strictly the truth, as several types of services are currently available:

PC Bank:

The forerunner to Internet bank has been around since the overdue 1980's and is still widely used today. Individual banks provide software which is packed on to an SME's office computer. The SME can then access their bank account via a modem and phone link to the lender. Access is not necessarily via the Internet.

Internet Bank:

Using a Web browser, a individual can gain access to their account, after the bank's application server has validated the user's personal information.

Digital TV Banking:

Using the typical digital reception equipment (set top field and remote control); users can gain access to their bank-account. Abbey Country wide and HSBC services are available via digital TV providers. One of its main offering points is the fact that no bill details are sent via the internet. This service is absent in our country.

Telephone (Mobile) Banking:

It includes the bank through using calling operator whether open public or private with wire or wireless. It's a form of e-banking that helps the household who have no facility to gain access to Computer and internet.

Now phone and online bank in Bangladesh only offer services such as balance check and request for statement. However the mobile banking allows fund copy, paving just how for money exchange through cell phones across the country

Text cellphone (Text message) Bank:

Many of the countrywide and multinational lenders have presented this service to permit customers with text phones to check on their balance, settle payments and transfer money.

ONLINE BANKING: Products & Services of Different finance institutions in Bangladesh

Eastern Bank or investment company Limited

  • Credit Card:

The brand name of bank card of EBL is 'Simple Credit Credit card'. The basic top features of EBL credit cards are: its free because of its clients forever, it can be used for balance copy, mobile alert facilities, it has world wide acceptability, Immediate advance loan service, risk guarantee program, convenient repayment option and global crisis assistance service etc.

  • Debit Card:

EBL has released the Debit Greeting card for the checking account holder who can put it to use to meet immediate responsibility if he/she has enough balance to his/her bank-account just after going with their ATM booths available with its each branch and sharing with others.

'Life-Style Greeting card' and 'Cool Card':

These Credit cards are introduced only for the students for a very soft condition but developing a great coverage.

  • Phone Bank:

EBL Providing Mobile Bank facilities to its clients as a part of online banking facilities.

  • SMS Bank:

EBL uses the SMS Bank to provide services to the grass-root level customers. Here a set Text message code is set for every single specific service.

DHAKA Lender LIMITED

  • Phone Bank:

The DBL has taken a great change in Telephone Banking. Now this facility is getting so attractiveness.

  • Internet Banking:

All its ATM booths as well as branches are linked through Internet that the any information among branches can be moved within a moment.

  • SMS Bank:

The DBL is using the Text message Banking to provide services to the grass-root level customers. Here a set SMS code set for each specific service.

  • International Credit card:

It's a card which is accepted World-wide for Purchase & Cash Withdrawals. From the great service for its customers.

  • Debit Greeting card:

It has been providing Debit Greeting card facilities to its customers who can meet their money drawback matters at any ATM booths of its operated or showing with others to supply the security of its clients' money.

  • Credit Cards:

The Dhaka Standard bank has been providing the CHARGE CARD facilities to its customer's interest. It's named as 'Dhaka Bank or investment company VISA Credit Cards'.

TRUST Loan provider LIMITED

  • Credit Greeting card:

The Trust Bank or investment company uses the 'VISA Credit Card' for Local, International and Dual Currencies. Its one of the bank's personal bank services.

  • Debit Cards:

The Trust Bank or investment company uses the 'Trust VISA-Electron Debit Credit card' for local, international and dual currencies. It really is one of the bank's automated services to the clients.

  • Phone Banking:

It has such services because of its customers.

  • Internet Bank:

It offers all the international transactions through the Internet Banking.

  • SMS Bank:

It deals with the grass-root clients through providing the Text message Bank services.

DUTCH-BANGLA BANK LIMITED

Bangladesh Bank or investment company data implies that there are about 600 ATMs in the united states. The quantity was less than 300 a year ago. Currently, Dutch-Bangla Lender Limited gets the greatest network with 260 ATMs, with up to 12 new booths coming every month. Thirteen banks can use DBBL booths. Besides, the lender has an contract with Q-Cash, allowing ATM cardholders of Mercantile Loan company and Trust Standard bank to use cash from the same booths. Also, Dutch-Bangla Loan provider clients can use all Q-Cash outlet stores. The lender has an identical agreement with E Cash that runs 24 booths across the country. Now a day, they may be providing truly Online Bank.

  • Credit Card:

The Dutch-Bangla Loan company is only your banker which has more ATM booths than every other banks functioning their business in Bangladesh. The 'DBBL-Nexus Credit Credit card' is one of the medium which it permits to withdraw a certain boundaries of money from its booths.

  • Debit Credit card:

It is another product by which the Cards holder is able to withdraw the money amount from his/her bank account. It's known as the 'DBBL-Nexus Debit Credit card'.

  • Phone Banking:

They are incredibly successful with the telephone banking (Mobile phone and Cell Phone).

  • Internet Banking:

About 80% of their e-banking is based on the internet Banking.

  • SMS Banking:

They also have SMS banking for the customers who are from the Internet connection and they can get access to obtain the immediate service with just an Text message.

ARAB BANGLADESH Standard bank LIMITED

  • Debit Credit card:

AB Bank uses the 'Abs Lender Visa Debit Cards'.

  • Credit Cards:

The name of Belly Bank's MASTERCARD is the 'Abs Standard bank VISA EASICredit Credit card'.

  • Phone Bank:

It uses cellphone banking as part of e-banking to perform its online banking transactions.

  • Internet Banking:

The lender provides this service to its customers with just a little limit.

  • Western Union Money Transfer:

It is also the member of Western Union Money Transfer that it's in a position to transfer money from one country to another within an instant.

BANK ASIA

  • Credit Greeting card:

The name of the Bank Asia's VISA OR MASTERCARD is 'Lender Asia Credit Card [MasterCard]'.

  • Debit Credit card:

The name of the Debit Greeting card of this loan company is 'Loan provider Asia Debit Greeting card'.

  • Mobile Bank:

It uses Mobile banking within e-banking to run its online bank transactions.

  • Internet Banking:

The loan provider provides this service to its customers with a little limit.

  • SMS Banking:

It uses the SMS banking to cope with its grass-root clients.

BRAC Loan company LIMITED

  • Mobile Banking:

It uses Mobile bank as part of e-banking to run its online bank transactions.

  • Internet Banking:

The bank or investment company provides this service to its customers with a little limit.

  • SMS Bank:

It uses the SMS banking to deal with its grass-root clients.

  • Debit Greeting card:

The name of Debit Card of the BRAC Lender is 'BRAC Bank or investment company Debit Card'. It's allowed for the customers who have only the checking account and can withdraw only the total amount belongs to its balance.

  • Credit Cards:

It presents the 0% CHARGE CARD named 'BRAC Bank or investment company Credit Card [MasterCard]' which is undoubtedly a special offer to all which is applicable for first 3 months interest free for many retail acquisitions. It charges no interest for balance copy. It also allows 10 more supplementary credit cards for all your relatives.

HONGKONG & SANGHAI BANKING CORPORATION (HSBC)

  • Credit Cards:

Although a limited number, a short listed Credit Cards are using with a few Bangladeshis who have a strong Credit history. It enables a certain boundaries to withdraw beyond one's balance.

  • Debit Credit card:

It's using quite definitely in Bangladesh. Several ATM booths are available in Bangladesh including Dhaka and Chittagong.

  • Mobile Bank:

It uses Mobile bank within e-banking to perform its online bank trades. But its not relevant in Bangladesh yet.

  • Internet Bank:

Each and every branch of the HSBC is connected through the internet and about 80% of the e-banking is based on the internet Banking.

  • SMS Bank:

They also have SMS bank for the customers who are from the Internet connection plus they can have access to get the immediate service with just an Text.

STANDARD CHARTERED BANK

  • Credit Credit card:

It permits to utilize the BANK CARDS to its customers.

  • Debit Cards:

The customers are using Debit Cards and having great facilities with international bank.

  • Internet Bank:

Most of the assistance of this loan provider is operating through the web.

Findings & Analysis

INDEPTH 'SWOT' ANALYSIS

(S)TRENGTHS:

  • Diversification: These ten finance institutions offer various online banking services as to attract the clients of different groups of people.
  • Lower cost benefit: As the banks bring in bulks of customers, their functional costs go down.
  • Multinational marketing capabilities: Being global lender, HSBC and Standard Chartered Bank looks forward to the multinational marketing features. They have prevailed in attracting personal savings of savers and shareholders and lending a large volume of loans by using their online banking facilities.
  • Start-up might take time: To be able to register for a bank's online program, we will most likely have to provide Identification and sign a form at a bank branch. If the lender is satisfied after proper scrutiny, the lender will allow us to get started on internet banking which may take a couple of days.

(W)EAKNESSES:

  • Centralization: These finance institutions managements are typically centralized & employs top-down way, decisions come form corporate branch and sometimes it takes enough time to obtain the approval for mastercard, where it could have been done faster. Since, It's competitive market, competition may take this possibility to move ahead from it.
  • Manual works: But the banking system is computerized of the finance institutions; simultaneously records are kept by hand for auditing goal, such as using rubber chop, supplying signatures, writing on varieties etc. Therefore, these manual works demolish the 'value' that the organization created significantly.
  • Costly: Still almost all of the bankers online banking facilities are slightly costly. As a result they may be yet to be been successful to bring a large number of customers under the umbrella of E-Banking.

(O)PPORTUNITIES:

  • Many untapped parts over the country: Banking institutions can entice even more customers by extending its branches to other districts or areas and at the same time ensuring online banking service in Bangladesh, and in that way increase their market share & success.
  • Innovation: Banking companies' innovative online bank products can satisfy various customers' needs & thus would be able to reach different aim for segments.
  • Credit Card Facility: At present, a particular segment has a potential demand for bank cards, so the banking companies can use this opportunity to pull that particular section before some of its opponents do. Although few banking institutions already providing this facility, however the demand is still there as the existing service is not sufficient evaluating to the necessity.

(T)HREATS:

  • Duplication of the HSBC's service: Existing multinational & local lenders could replicate the banking institutions' financial services, so they have to proceed of others faster.
  • Emerging Competition: New local and multinational lenders or other financial institutions could emerge as the banking industry in Bangladesh continues to be growing, and become a hazard to the existing online banking service providers.
  • Political instability: As Bangladesh's political situation is unpredictable; it affects bank industry as well. So, this means the bankers may face fluctuating demand for their products too.

Security System employed by the Banks

Most of the lading bankers follow the next security system because of their online bank.

Software:

Online bank service of these banks employs the 128-bit Secure Socket Covering (SSL), which is one of the most powerful encryption technologies; most commonly used by large-scale online vendors, finance institutions, and brokerages worldwide. All online consultations between customers and the banking companies are secured by up to 128-piece encryption, which best defends customers' information against disclosure to third celebrations.

TPII software operates on the UNIX platform, which is known to be the world's most secure and redundant operating system providing multiple users and multiple tasking facilities and Databases is looked after in Oracle (RDBMS), the world's soundest databases system.

Encryption is used to safeguard information:

Encryption is a method of scrambling customers' information to protect its transmission across the Internet. Encryption transforms data into an unreadable form, and decryption reverses that process. Both encryption and decryption require the use of a special code, usually referred to as an integral. The encryption of data offers a strong amount of safety against tampering while data is moving through the web.

Cookies are not used because of this service:

A cookie is information a web site places on customers' hard disk drive so it can remember something about customer at another time. This system allows the server to store its information in regards to a individual on the user's own computer. These ten bankers do not use cookies because of this service.

ATM Hardware:

a) Racal brand 128 little Host Security Component (HSM) through which card information is encrypted, decrypted along with PIN technology. This device is employed worldwide to keep and relay highly secure information as an exchange program. After HSM has confirmed and approved the PIN and decrypts it, customers obtain cash from ATM. The HSM is also in charge of generating ATM Cards PINs for the TPII.

b) Each ATM has a built-in 64-little bit encryption device for guaranteeing maximum security during transactions.

c) Three different ATM models are currently in use. They will be the 1064ix (stand-alone ATM), 1071ix (Through-the-Wall ATM) & 1072ix (Through-the-Wall) models. Each of the ATMs can capacitate up to four cash cassettes, of which, each you can endure to 2, 000 cash records. Cash launching in ATMs are structured entirely on use regularity of the machines.

d) All ATM booths have 24/7 CCTV surveillance systems to keep information of transactions occurring for a period of over twelve months. Moreover, each booth has a hot-telephone website link affixed for troubleshooting and instant help-desk services.

Problems of implementating online banking

  • Infrastructural deficiency: [WEAKNESS]

To put into practice online banking in our express, the infrastructure is essential. For this we need option of electricity supply and telecommunication. Without growing these we can't develop this online banking system properly.

  • Budget allocation: [WEAKNESS]

The software is vary intricate to build up because e lacking of apposite in-house. In this respect, finance institutions are to rely on software developing concerns at extreme costs.

  • Hackers:

The hacking, the serious crime of computer triggers the injury and risk to the security of users of computer involved in online technology. As a result, hackers are the influential troubles of users of web business of a loan company. Online banking services will not be feasible for an economy as most people are illiterate. They can be beyond the scope of normal banking service. Micro-credit industry is now not only providing small credit but also mobilizing personal savings.

  • The big problems are in the regulatory construction: [WEAKNESS]
  1. Lack of full convertibility. Bangladesh citizen cannot have access to the world wide online banking service anticipated to regulatory constraints.
  2. The reserve position won't allow free inter-country fund transfer.
  • Risk: [Hazard]

The credit information designed for lenders is often wrong, so it is very difficult to check whether the customer has difficult on a card granted by another bank. A data bank is required to see the list of the defaulters. More unconventional finance institutions fill that difference in the market, trying to grab a show of the internet money, on the premises that they signify the richest & most educated part of the population.

  • Privacy:

Another central concern to the consumer is privacy. Repository marketing is only the manipulation of data over which customers feel that they want to involve some kind of control. The general rule is that consumer privacy protection under the law should be reputed. Individuals should easily decide out of online marketing as an extension of their right to be taken off junk mail lists.

  • Unemployment: [Danger]

One pre-conceived widespread idea is personal computers will displace labor. This is a subject of empirical analysis. Productivity and profitability are directly interrelated conditions. The experienced extra staffs can be easily soaked up into the increasing financial market. The unemployment is only going to be structural unemployment since the displaced labor will sooner have later acquired the necessary computer skills and thus become more useful.

  • Cost-effectiveness: [Weakness]

Another misconception is that it is not affordable. None of the banking companies which have designed properly on automation plan and integrated it with proper cost gain evaluation became less superior. Actually the approval of financial modernization is a subject of perspective to the future. Unless computer systems become cheaper and online facilities become within the reach of middle income, they will remain not really acquainted with internet, and will thus avert them.

Role of Government

This is particularly important for countries like Bangladesh where very little has been done in development these technologies and skills to promote and support online banking. The government might take the following guidelines to market online banking inside our country:

The intergovernmental agreement for harmonizing the guidelines and regulations that will help in smooth transformation of the world market and expansion of a unified world market.

The legislation should simply foster competition, protect intellectual property and personal privacy, and prevent scam to do businesses under whatever terms they consent upon. An international even commercial code is needed to simplify and encourage digital commerce under constant rules and protection under the law.

Govt. can undertake perfect initiatives to construct feasible, system of information technology within affordable capacity. Financial allocation should be more widen for global standard banking technology.

Adequate amount of bank worker will have both computer and banking aptitude and cognizance, suitable in the banking perspective to enhance the bank sector.

"Tele-communication" sector is pre-conditions to make speediest online bank services. Unfortunately a tale-communication service of govt. is yet to reach to remote and rural area.

RECOMMENDATIONS

These banking companies should -----------

The management of the banks should regularly administer marketing research activities in order to keep a regular tabs on satisfaction levels. As customer objectives and satisfaction aren't static figures regular research at sufficient intervals should be conducted.

  • Handle complains effectively:

The lenders should actively manage the complaints of varied customers and encourage customers to provide feedback about the assistance. The management should acquire document complaints & use that information to recognize dissatisfied customers, appropriate specific problems where possible and identify common service failure points.

  • Focus on segmentation strategies:

The loan company should focus on the various demographic segments that are currently not very satisfied with the lenders services. Products services should be personalized for these segments. Appropriate research and research should be designed to find out the requirements of the dissatisfied segments.

  • Do Marriage Marketing:

The banking institutions should target more on existing customers in order to construct strong and dedicated romantic relationship with them as the survey proved that satisfied customers more aptly or certainly advises the lender to friends and relatives. Thus the energy of relationship will foster Positive Term of Oral Communication and will attract new customers better value.

  • Establish more ATM booths:

From the review, it is clear that customers are not happy regarding ATM's locations. So, sufficient volume of ATM booths should be founded in several location to reach out the clients even further and thereby satisfying their demand.

  • Introduce MASTERCARD Facility:

While controlling customers over the counter & also over telephone, a certain demand for credit-based card facility was observed strongly. We think, if the bankers introduce this service, more customers will be seduced & therefore, they will achieve higher market show.

  • Reduce Manual works to least:

Although many of the ten lenders do automation, still there are a lot of things which can be done manually to be able to tract any mistakes or business deal, especially in crisis such as system failure etc. Because of this, so much time is allocated to this type of manual maintenance, which reduces 'value' on delivering services. Thus, it hampers efficiency on providing faster services.

  • Educate customers in using Mobile banking service:

A few banking companies have introduced phone banking service or computerized telephone bank (ATB) to be able to fulfill basic customer needs and queries quickly, without interrupting employees. However, customers looked reluctant to use this facility scheduled to fear of machine usage or difficulty in keeping in mind the seventeen digit statistics.

  • Introduce SWIFT:

Autonomous Banking culture, reducing reliance on manual service, should be in abundance irrespective of govt. and non-govt. firm in association with `SWIFT' to effect a result of the whole banking service for large well being of individuals.

  • Ensuring proper training to the employees:

Training should be imparted to the prevailing IT workers. 'the new recruits for IT personnel should be provided with relevant education backdrop.

Conclusion

Online Banking cause the trip with a objective of reaching to target group of individuals across our country. The globalization facilitates the extinction of untidy and frustrating services to be able to consolidate the variegated, faster as well delightful services to keep the people in regular touch of modernization. Considering this decision, banking institutions and financial concerns needed some welcome move just lately. Usually all private owned or operated banks from overseas coupled with a few local lenders in cooperation with domestic support launched the pattern of on-line banking. The completely refurbished banking sector stresses effort to propagate this culture of bank.

In this connection, just a few banks create the well-timed steps by eradicating all sorts of strains and trouble in all value. Since the financial services needs to be very maximum certain not scattered to foster the perception and reliance of men and women over bank sector. Thereby, the very exclusive and traditional service method can be accommodated amidst of integration of joint collaboration with modern system. Along with, the existing bank sector gives much heed and concentration to the most effective expansion and development of Online BANK OPERATING SYSTEM. In this respect, Bangladesh continues to be in the backseat whereas the rest of the world is getting rid of in fire of excellence at large. Despite the ascendancy of amazing constraints, inconsistency that engulf the origin of the web trading, we are extremely aspiring and sanguine of quick and illustrious development of online banking as rapidly as you can.

Therefore, the banking institutions should proceed of its competitors by applying the recommendations provided above. Certainly, it can help reducing the distance (or dissatisfaction) & retaining existing customers. And, once this dissatisfied customers become satisfied, you won't only help to maintain existing customers, but it will also help to drag clients through positive word-of-mouth communications. Also, it can help to get new segments with different needs. Many customers are dissatisfied credited to some areas of incompetent services. So, to be able to maintain in the highly competitive banking industry, the banking companies should take this matter under serious thought. Thus, they ought to concentrate on increasing the market share by providing quality service as guaranteed & at the same time, providing new products/services that could satisfy customer need even more; developing a competitive gain over its rivals.

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