1

Use of technologies in the banking sector of

Bangladesh

Mahmudul HasanID: 1611017014

Romana Begum

ID: 1611017047

Farhana Jahan Liza

ID: 1611017049

Masum HussainID: 1611017021

Md.Yeasir ArafathID: 1611017008

Tahfim Ahmed Chy

ID:1611017051

Submitted By,

Torch Bearer’s

Submitted to:Prof.Dr.Bashir Ahmed

Bhuiyan

ProfessorDepartment of

Business Administration

Leading University, Sylhet

  

Information and communication technology (ICT) has become the heart of banking sector, while banking industry is the heart of every robust economy.

Information and communication technology (ICT) has in particular brought a complete paradigm shift on the bank's performance and on the customer service delivery in the banking industry.

The ICT development has a significant effect on development of more flexible and user friendly banking services.

In a bid to catch up with global development, improve the quality of customer service delivery, and reduce transaction cost, banks have invested heavily in ICT, and have widely adopted ICT.

Introduction

Bank:An organization that do the activities of receiving demand deposits and time deposits, honors instruments drawn on them, and pays interest on them; discounts notes, makes loans, and invests in securities; collects checks, drafts, and notes; certifies depositor's checks; and issues drafts and cashier's checks is called bank.

Technology:Is the collection of techniques, skills, methods and processes used in the production of goods or services or in the accomplishment of objectives, such as scientific investigation.

Definition of the terms

Within the financial service industry, the banking sector was one of the first to embrace rapid globalization and benefit significantly from IT development. The technological revolution in banking started in the 1950s, with the installation of the first automated book keeping machines at banks. The first Automated Teller Machine (ATM) is reported to have been introduced in the USA in 1968 with only a cash dispenser. Electronic banking idea developed in Bangladesh since 1992 through several multinational banks.

Historical background of using technologies in bank

Banking sector offer opportunity Technology for reduction of both paper and people. Banks have developed EBS for three main reasons.

To protect and increase market share To reduce operating cost by subtracting physical

capitalizing and Technology for labor To generate new revenue use of technology banking

allow banks to expand their markets for trade & deposits

Application of Technologies in banking sector

Internet BankingIt provides a secure medium for transferring funds electronically between bank accounts

Mobile BankingIt involves the access to, and provision of, banking and financial services through mobile devices.

SMS BankingIt allows customers to make simple transactions to

their bank accounts by sending and receiving text messages.

Banking Services using technologies (contd.)

Electronic Funds TransferIt is a system of transferring money from one bank account to another without any direct paper money transaction.

Online BankingIt is the service where an account is accessible from any branch of a particular bank.

Automated Teller Machine (ATM)ATM means computerized machine that permits bank customers to gain access to their accounts and permit them to conduct some limited scale banking transactions with a magnetically encoded plastic card and a code number.

Banking Services using technologies (contd.)

Home BankingIt frees customers of physical branches and most transactions will be automated sitting at home. For example: HSBC is giving Hexagon facilities to their individual and corporate customer.

Point of Sale (POS)It is an innovative electronic money transferring system that allows the customers of banks to pay for their purchases through their ATM and credit card at any POS enabled retailer.

Debit CardsDebit cards are linked directly to the bank account of its holder. The holder of debit card can use it to buy goods or withdraw cash and the amount is taken from the bank account right away.

Banking Services using technologies (contd.)

Credit CardsA credit card is a form of borrowing. Credit cards allow its holder to 'buy goods now and pay later' - called 'buying on credit'. They aren't linked to the bank account of the customers.

MICRMICR (Magnetic Ink Character Recognition) is a character recognition technology adopted mainly by the banking industry to facilitate the processing of cheque.

Open online Letter of CreditIt means that for opening letter of credit the customers need not to go to the bank physically. They can open the letter of credit with the help of online banking.

Banking Services using technologies (contd.)

SWIFTThe Society for Worldwide Interbank Financial Telecommunication ("SWIFT") operates a worldwide financial messaging network which exchanges messages between banks and other financial institutions. SWIFT global network carries an average 4 million message daily and estimated average value of payment messages is USD 2 trillion. SWIFT is a highly secured messaging network enables Banks to send and receive Fund Transfer, L/C related and other free format messages to and from any banks active in the network.

Online transactions:Buying and selling goods and services using VISA &Master card across the globe.

SWIFT code and online transactions

Percentage of Banks providing Technology Driven Services

Source: http://www.itu.int/ITU-D/ict/statistics

Top banking groups in the world ranked by shareholder equity ($m)

World Scenario of Banking

1. 24- hours cash deposit & withdrawal facility 2. Quick cash withdrawal without having queue 3. Account activities enquiry in any moment 4. Statement request through ATM/Debit/Credit Card 5. Transfer own funds to other account number in same

bank 6. Present Balance enquiry 7. More than16-hours shopping facilities

Facilities for using technologies in banking sector of Bangladesh (contd.)

8. Deposit or Mail cash or cheque(s) (Cross cheque) through mechanical device.

9. Changing Personal Identity Number 10. Cash deposit which will originally deposit very next

day of deposit that means do not need to go to the branch for every occasion.

11. Mini statement which contain 8-10 previous transaction records

12. Can able to pay utilities bill 13. Withdraw money by using VISA, PLUS, MASTER,

MAESTRO and other credit card 14. Withdraw money from dollar account which gives

taka by converting foreign currency.

Facilities for using technologies in banking sector of Bangladesh

Anywhere Banking: No matter wherever the customer is in the world. Balance enquiry, request for services, issuing instructions etc., from anywhere in the world is possible.

Anytime Banking:Managing funds in real time and most importantly, 24 hours a day, 7days a week according to convenience of the customers.

Cost reduction: Now the customers can make transactions at a cheaper rate.

Cash withdrawal from any branch / ATM.

Benefits of Technology use in banks(To the Customer)

Innovative, scheme, addresses competition and present the bank as Technology driven in the banking sector market.

Reduces customer to the branch and thereby human intervention.

Inter-branch reconciliation is immediate thereby reducing chances of fraud and misappropriation.

On-line banking is an effective medium of promotion of various schemes of the bank, a marketing tool indeed.

Integrated customer data paves way for individualized and customized services.

Benefits of Technology use in banks(To the Bank)

Traditionally the relationship between the bank and customers has been on a one-to- one level via the branch network.

This was put into operation with clearing and decision making responsibilities concentrated at the individual branch level.

The head office had responsibility for the overall clearing network.

The modern bank cannot rely on branch network alone.

Impact of technology on banking system (contd.)

Now the customers get greater access to information on their account status and on the bank's many other services.

Creation account information layers, which can be accessed both by the bank staff as well as by the customers themselves.

Information about financial situations and about the services offered by the bank.

Impact of technology on banking system

The data processing capability technologies of the computer, particularly the rapid throughput, integration, and retrieval capability technologies, give rise to doubts in the minds of individuals as to whether the privacy of the individuals is being eroded.

So long as the individual data technology are available only to those directly concerned, everything seems to be in proper place, but the incidence of data being cross referenced to create detailed individual dossiers gives rise to privacy problems.

Customers feel threatened about the inadequacy of privacy being maintained by the banks regarding to their transactions and link at computerized systems technology suspicion.

Impact of technology on Privacy

Inefficient and inadequate knowledge of the bank management about the technology driven banking.

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 technology driven banking system.

The challenges for technology driven banking (contd.)

Inadequate back and front office management. 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.

Biasness of the management of bank towards foreign software.

Legal barriers and inappropriate policy framework.

The challenges for technology driven banking

There are huge possibilities of the banking sector in Bangladesh. These are below:

Banking sector of Bangladesh has a great opportunity to become a major sector of the national economy.

Bangladesh has huge number of population. This advantage may accelerate expansion and growth of Bangladeshi banking sector.

Bangladeshi banking sector is very much capable to ensure proper quality of the product services as per requirement of the global market.

There are ten foreign banks active in Bangladesh. So there are huge

prospect for international banks to open their branch in Bangladesh.

Possibilities of the Banking Sector of Bangladesh

Review their business strategy and create the required space for adopting technology driven banking.

Fortify ICT department through providing training to IT employees and procuring essential 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 about the basic ICT related matters.

Adequate legal and environmental framework is essential for flourishing tech based banking.

Recommendations for improvement (contd.)

They may also extend those services to the rural people of Bangladesh so that the rural people can also get the benefit of technology driven banking.

Technology driven banking can be promoted through advertising in print and electronic media.

Most of the aged persons are reluctant to use the new technology. For them technology based banking is troublesome.

The banks can give few incentives to the customers for using the technology driven services such as low service charge for maintaining the account of those customers.

Recommendations for improvement (contd.)

The tech based banking products can be made more cost effective to make them more attractive to mass people.

The management of the private commercial banks and nationalized commercial banks might allocate a part of their yearly profit for ICT penetration in banking activities and human resources development.

In order to detect and minimize the security risk the banks can take some security counter measures, such as, preventive measures or deterrent efforts.

the government may provide assistance for reducing the cost of providing the technology driven banking services, organize training facilities with private partnership, widen multiple access facilities like web, telephone, ATM etc.

Recommendations for improvement

Modern electronic banking concept in the banking services is new for Bangladeshi people. People are not also conscious about the advantages of the technology. Some multinational banks have already introduced their marketing activities over their targeted customers for specialized products like electronic products which is found very effective. The multinationals are coming up towards people with variety of highly technical products, which can solve the people’s problem and can able to modernize their lifestyle.

Concluding remarks

That’s All of Our

Presentation

Thanks for Patient Hearing