Status of E Banking in Pakistan

Group Members

• Mubashir RazaqBB-09-17

• Raza Waheed KhanBB-09-99

INTRODUCTION

E-Commerce Banking Electronic

Banking

E-BANKING• Daniel (1999) defines electronic banking as the delivery of

banks' information and services by banks to customers via different delivery platforms that can be used with different terminal devices such as a personal computer and a mobile phone with browser or desktop software, telephone or digital television.

-OR-• Electronic banking consists of any system that uses electronic

signals to replace people or paper.

DRIVERS OF E-BANKING REVOLUTION

A rapid growth of technology, especially in telecommunication

sector.

Technological advancement has influenced the banking sector firms

too.

More educated customers demanding better services.

Types of E-Banking Services

TYPES OF E-BANKING SERVICES

Phone Banking.

Mobile Banking (SMS banking & GSM toolkit).

Home Banking.

Automated Telephone System.

TYPES OF E-BANKING SERVICES

Internet Banking or Online Banking.

Payment Instruments.

Self Service Zones.

PHONE BANKING• is the provision of banking services using a classic telephone

line. A bank client can obtain the necessary information on dialing a telephone number specified in advance.

• a client can also actively use the bank payment system and request following services:

– a payment order .– open or cancel a term deposit or a current account.

AUTOMATED TELEPHONE SYSTEM

• Works on the basis of a menu through which clients can move around using buttons on the telephone.

• The service menu tree is usually designed to be simple so that a choice does not take too long.

• For secure transactions, customer has to enter his/her ID card number, PIN code, or any other verification code.

Mobile Banking

GSM ToolkitSMS Banking

SMS BANKING• uses short text messages sent through the client’s mobile

phone• A client can automatically receive information about his

account balance: an SMS is sent to the client immediately after a certain operation is performed, or on request.

• a client sends the bank a correctly formatted message which processes it and answers the client’s request by SMS.

• Security is ensured through, PIN, ID card numbers and passwords or combination of both etc.

SMS BANKING• A client however is required to know the code of every

transaction including constant and variable symbols. The whole message containing data separated by # symbols sometimes has up to fifty characters.

– 123#36302#0000000

GSM TOOLKIT• GSM SIM Toolkit is a software interface that enables arbitrary

changes to the mobile phone menu.

• Similar to Sim toolkit in your mobile for e.g. Ufone Funkit.

GSM TOOLKIT

HOME BANKING• is a service that enables a bank client to handle his accounts

via a software from a computer from a place selected in advance, at home or in the office.

1 •High level of security.

2 •Definition of users and their rights

3 •Openness of the system

4 •Simplicity of use.

HOME BANKING• A home banking computer system is a multi user application,

meaning that several of the client’s employees can work with it :– Administrator – can define new employees, change rights,

– Sender – ensures communication with the bank and transmission of prepared data,

– Accountant – can type payment orders and orders for collection,

– Viewer – can browse through statements and announcements received.

INTERNET BANKING• Performing business transactions over the internet through

bank’s website.• User can perform Active and Passive operation both.

MAIL BANKING• The most frequently used service is sending account

statements at agreed periodicity to the client’s mailbox. • E-mail is not used for more complex operations.

Payment Instruments

Electronic Wallet

Payment Card

PAYMENT CARD• A payment card is currently one of the most widely used

payment instruments designated for authorized holders through which they can perform non-cash payments or cash withdrawals from an extensive network of automated teller machines.

– ATM Card

ELECTRONIC WALLET• An electronic wallet represents a chip card similar to a

payment card that contains a record of a financial sum that is available to its owner.

• Debit card & Credit card

SELF SERVICE ZONES• is a fully automated alternative work place of a bank with

terminals and devices that clients can use to get various bank services.

• It enables active and passive operations offered by the bank to be made without the presence of a bank employee.

• Equipment includes modern security systems outside and inside a self-service zone.

• A payment card in combination with a password is used to access a self-service zone. It is also possible to use other authentication devices, such as an electronic key, but also a fingerprint.

• Self-service zones are available 24 hours a day, 7 days a week.

Benefits Associated with E-Banking

1 •factors motivating consumers to use online banking are lower fees followed by reduced paper work and human error.

2 •Convenience of conducting banking transactions outside bank’s physical place at any time.

3 •each ATM could carry out basic routine, transactions as do human tellers in branch offices, but at half the cost and with a four-to-one advantage in productivity.

4 •number of branches and also the staff required in banks have reduced.

5 •So the main reason behind accepting the online banking a service is the time, cost saving and freedom from the place.

Risks Associated with E-Banking

1 •Security concerns

2 •Technological problems

3 •Low education level of customer

4 •Lack of specific laws to govern Internet banking is another important concern for both the bankers and the customers.

1 •Job Losses

2 •Lack of opportunity to socialize

3 •Development of lazy society

Other Risks

E-Banking in Pakistan

INTRODUCTION IN PAKISTAN

• Foreign banks introduced ATMs and Credit cards.

Mid 1990s

• Electronic Transactions Ordinance

2002 • Allied bank introduced Online Banking system

2004

PERCEPTIONS TOWARDS E-BANKING IN PAKISTAN

• Hassan et al. concluded that most of the Pakistanis are well aware of electronic banking, but they are not satisfied with the e-banking that are currently provided by banks of Pakistan.

• Improvement in security level and services of electronic banking is demanded by customers.

• Only 12% customers were familiar to use the debit and credit cards facility while 88% customers were not aware of debit and credit cards (Pakistan Telecommunication Authority, 2007).

• Due to lack of trust on technology and low computer literacy rate, customer hesitates to adopt new technology (Ahmad et al, 2011).

• Nancy et al. (2001) argued that customers like to interact with humans rather than machines.

E-Readiness in Pakistan

WHAT IS E-READINESS???• E-readiness is defined as, “what is the country’s ability while

promoting, supporting and utilizing digital and information and communication technology (ICT) services” (Economist Intelligence Unit, 2008, p. 2).

• When country uses Information and Communication technology to carry out more of their activities, its economy can become more visible and efficient (Economist Intelligence Unit, 2008, p. 7).

CAUSES OF LOW E-READINESS???

• A normal personal computer may cost 30’000 PKR which is the average salary of two months for the typical internet customer (Nizamuddin and Khalid, 2001).

• high speed internet connections in Pakistan, are very expensive and due to high inflation and low income level, majority of the population can’t afford these connections.

• Computer literacy rate is also low in Pakistan.

Types E-Banking Services Provided in Pakistan

Inquiry Payments

Requests

Downloads

Types

INQUIRYInquiry about the following things:

Bank Statement.Checking of the balance.Statement Check Inquiry.Fixed deposit inquiry.

PAYMENTSThe funds transfer.Payment of credit card.Direct Payments.Payment of Utility bills.

REQUESTSRequest for Cheque book.Stop payments request.Demand draft request.Request for Credit/Debit card.

DOWNLOADPersonal Profile.Bank Statement.

Conclusion

• It is beneficial and convenient for both customers and bankers.

• there are also some demerits associated with e-banking in Pakistan, like hacking, low computer literacy, security and privacy issues etc.

• India has overcome these security issues through biometrics; same should be done in Pakistan.

• Government also needs to play its role to improve the e-readiness in Pakistan, by improving the telecommunication infrastructure and regulating e-banking through its policies.

Thank you!