On-line Banking of Trust Bank

Executive Summary

Online banking which is the amazing creation of modern science has become the latest delivery channel for banking services. Bangladeshi banks are desperately embracing this new distribution channel to prepare themselves for global business competition. Online banking gets momentum over traditional banking due to this motto-‘Any time banking, any place banking and any where banking’. Despite the possibilities, there are various factors such as security of online transactions, technophobia, reluctance to change and preference for human interface which appear to impede the adoption of online banking. Consequently these factors promoting or hampering the adoption have been the prime concern of this study. Bangladesh is now in an infancy stage of online banking where 63% banks are on the online track and 10 banks are in the verge of becoming online. Eye catching feature is that female online banking users are very poor and most of the banks provide online banking services in divisions, major city corporations and port areas. There is also a shortage of infrastructure and regulatory facilities.

TBL Online banking enables customer to access his/her personal or business accounts anytime anywhere from home, office or when traveling. Through online banking the customers can view his account summary, account details, transfer funds, pay bills, standing instructions, statement request, cheque book request, change password, letter of credit and bank guarantee. To defense the customer interest TBL data center is equipped with world’s number ‘one’ networking equipment from Cisco, such as switch, router and pix firewall. The card products offered by TBL are Visa, Visa Plus Debit and Credit Card. The ATM count stood at about 50 eclipsing other networks by a large margin that has led the majority of other banks to sign sharing agreements instead of pursuing their own ATM network.

Finally this report attempts to draw some recommendations to overcome the barriers. If these recommendations are followed perfectly by the concerned, it is not so far that Bangladesh will embrace the benefits of IT in the full extent.

I am very much optimistic that the result of this study will help banking sector of Bangladesh to move forward quickly.

Contents

NO	TITLES		PAGE NO
1	INTRODUCTION	1.1) PROPOSITION OF THE STUDY 1.2) ORGANIZATION OF THE REPORT 1.3) OBJECTIVES OF THE REPORT 1.4) RATIONALE OF THE STUDY 1.5) IMPORTANCE OF THE STUDY 1.6) STUDY AREA 1.6) METHODOLOGY OF THE STUDY 1.8) LIMITATION OF THE STUDY	1 2 2 3 5 5 7 7
2	LITERATURE REVIEW	2.1) INTERNET IN GENERAL 2.2) ONLINE IN GENERAL 2.3) CONCEPTUAL UNDERSTANDING OF INTERNET BANKING 2.4) GLOWING ATTRIBUTES OF INTERNET BANKING 2.5) THE LEVEL OF BANKING SERVICE OFFERED THROUGH INTERNET. 2.6) ONLINE BANKING IN BANGLADESH 2.6.1) ENTRANCE OF INTERENET 2.6.2.INTERNET IN BANKING SECTOR 2.6.3) CURRENT STATE OF ONLINE BANINNG IN BANGLADESH 2.7) CONSUMER BEHAVIOR OF ONLINE BANKING 2.8) FACTORS AFFECTING ADOPTION OF ONLINE BANKING  2.9) MOMENTOUS OF ONLINE BANKING OVER TRADITIONAL BANKING	7 7 8 8 8 9 12 14 17
3	TBL AT A GLANCE	3.1) COMPANY PROFILE 3.2) MISSIOM 3.3) VISION 3.4) POSITIONING STATEMENT 3.5) OUR VALUE 3.6) CORE OBJECTIVES OF TBL 3.7) TBL’s CORPORATE INFORMATION 3.8) TBL’s PRODUCT 3.9) SMS BANKING 3.10) PHONE BANKING 3.11) PASSPORT SERVICE 3.12) LOCER SERVICE	19 20 20 21 21 21 21 22 24 25 25 26
4	ONLINE BANKING OF TBL	4.1) SEGMENTS OF TBL OB 4.1.1)  A/C OPENINIG AND ACCESSING ONLINE BANKING 4.1.2) ONLINE BANKING FEATURES 4.1.3) TERMS AND CONDITIONS OF ONLINE BANKING 4.1.4) SECURITY WITH ONLINE BANKING 4.1.5) ONLINE BANKING USERS MANUAL 4.2) CARD PRODUCTS AND CHARGES 4.3) TBL’S ATM SERVICES 4.3.1) ATM NETWORK/PARTICIPATING BANKS 4.3.2) TBL’s ATM LOCATION 4.3.3) HOW MUCH MONEY DBBL KEEPS IN EACH ATMs 4.4) TBL’S POS 4.5.STEPS OF TBL TO PROVIDE SECURITY TO THE CUSTOMERS 4.5.1) DIMENSION OF SECURITIES DEMAND BY THE CUSTOMERS 4.5.2) SECURITY THREATS 4.5.2.1) IT RELATED THREATS 4.5.2.2) NON-IT RELATED THREATS 4.5.3) SCURITY COUNTER MEASUREMENTS 4.5.4) TBL’S SECURITY COUNTER MEASUREMENT 4.5.4.1)PREVENTIVE MEASURENTS 4.5.4.2) DETERRENT MEASUREMENT 4.6) CONSEQUENCE OF TBL OB 4.7)DEMOGRAPHIC FEATURES OF TBL ONLINE BANKING 4.7.1) GENDER 4.7.2) PROFESSION 4.7.3) EDUCATION 4.8) SWOT ANALYSIS OF TBL OB 4.9) ADOPTION THEORY & TBL OB 4.10) PORTER’S FIVE FACTORS MODEL & TBL OB	28 41 42 49 49 52 53 55 57 58
5	COST BENEFIT ANALYSIS OF OB PROSPECTS OF OB IN BANGLADESH GOVERNMENT POLICY FOR OB		61 67 68
6	FINDINGS		71
7	RECOMMENDATION		72
8	CONCLUSION		72

INTRODUCTION

  

1.1. PROPOSITON OF THE STUDY

For over a decade, Information technology has significantly affected the banking industry .Banks and other financial institutions have improved their functions as a financial intermediary through adopting various information technologies. Generally when the information technologies combine with functions of banks and financial institutions, it is called electronic banking.

Among various electronic banking technologies Online banking or internet banking is the latest banking technology and the most rapidly diffused banking technology through out the world. Now, in a world which is becoming increasingly opens as a result of the internet and www, online banking has been gaining ground around the globe. This offers banking institutions a new frontier of opportunities and challenges further augmenting competition in the global banking market.

Since the launch of Internet the large planet has become a smaller one. It has rendered enormous impacts on business sectors. Remarkable development in ICT (Information and Communication Technology) has introduced a global revolution in banking sectors. The global trend in business arena set some challenges that cannot be fulfilled with the help of the traditional banking system.

The survey of current banking system in Bangladesh reveals the fact that it requires rapid modification and adaptation to keep harmony with the world economy business. It becomes more obvious by observing the increased number of customers in some modern banks while others are losing them. In the context of Bangladesh, a country of more than 140 million people, it is to be realized that there is no other option for us than to join the current trend. Otherwise it is almost impossible to bring any sort of fruitful achievement for the country.

At present, people are very often scared of doing any banking function with most of the bank of Bangladesh. For, they still follow the traditional paper-based system. It, then, becomes cumbersome to perform even a simple financial service such as account checking. Therefore, the existing banking system in our country is awkward, slow and error-prone. It, in one hand, fails to meet the customers’ demand and, on the other hand, it causes some significant losses both for the banking authority and traders. Electronic banking, on the other hand, solves the above problems. Furthermore, it opens up some other salient aspects such as increased foreign trade and foreign investment.

In order to cope with the changing technology Trust Bank pursuits Online banking services keeping in mind to hold up their position in the global competitive world providing better services that customer expect being a man in the twenty first century.

1.2. ORGANIZATION OF THE REPORT

The paper is organized in the following manners:

·       The first chapter describes the objective, rationale, importance, study area, methodology and the limitation of the study.

·       The second chapter gives a clear notion of the literature review of Online banking and the current state of Online banking in Bangladesh

·       The third chapter presents Trust Bank’s profile, mission, vision and core objectives.

·       The fourth chapter is organized with the light of the Online banking of Trust Bank

·       The fifth chapter consists of SCBA of OB, prospects of OB and the government policy for OB.

·       Then the findings and concluding remarks of this paper are described.

1.3. OBJECTIVES OF THE REPORT

The sensible motives of preparing the report on Online Banking are to depict the overall scenario of banking sector at a glance with the light of ICT through the following grounds:

Ø Why does Online banking get momentum over traditional banking system?

Ø What are glowing attributes of online banking?

Ø What’s the social cost and benefit of Online banking with respect to Bangladesh?

Ø What’s the online banking system of Trust Bank?

Ø Does Trust Bank Online banking provide securities with respect to its customer’s confidentiality?

Ø To discern the Trust Bank Online banking authorization by the Bangladesh Bank

1.4. RATIONALE OF THE STUDY

An immense development has been brought by the scientists in the field of information technology. Online banking is the innovative product of such advancement of information technology. After this proliferation of technology what sorts of changes found in the human civilization, how online banking ripples the mind of the people at the twenty first century, what the reacts towards the new technology of the society, how it impacts the dimension of operations of the financial institutions and ability to provide security about the customers confidentiality are the immanent driving forces behind me to opt this topic and make a analysis.

1.5. IMPORTANCE OF THE STUDY

Internship is an integral part of our BBA Program. Each business graduate has to prepare report that carries a weight of 3 credits after internship. As a student of Business Administration I am bound to do it to fulfill my course obligation. And so I have picked this vibrant topic to accomplish my report.

Online banking is the latest banking technology and the most rapidly diffused banking technology through out the world. Now, in a world, which is becoming increasingly open as a result of the internet and WWW, online banking has been gaining ground around the globe. This offers banking institutions a new frontier of opportunities and challenges further augmenting competition in the global banking market. Electronic payment international (2001) indicated that 39% of US households had access to online banking and 18% of them used the service. Also Pastore (2001) predicted that 87% of community banks would offer online banking in 2003 to meet consumer’s needs.

Due to the immense proliferation of ICT at the twenty first century, the whole world turns into a planet. The ripple of ICT revolution hits the business sectors and so the business takes a new shaped as an E-business. The radical changes of ICT compelled the financial institutions to be involved in ICT to cope with the changing modern business trend. As a third world country, Bangladesh has a practicable opportunity ahead though the existing banking system is far behind to reach the expected level in the global banking system.

Thus, in order to get a share of the opportunities and to face the new challenges, the government of Bangladesh provided the legal framework for domestic’s banks to offer the online banking services.

Online banking is no longer a matter of debate. The concept of online banking is not so common in Bangladesh. But the people who are aware of it really appreciate the benefits it offers. I could say that it has just come to light in Bangladesh. However at the pace where it is growing brings necessity to identify the issues associated with it and finds a solution.

Legal infrastructure is a must for implementing ICT-based banking services. Bangladesh bank along with the concerned agencies should work out a plan to develop and enact the following regulatory documents: e-banking regulation, digital signature law, dispute settlement law, amendment in evidence act, etc. Central bank forms a "center for online banking technology and management" to support the banks with latest technological development in the banking world and provide expert support for ICT implementation. It’s an opportunity to expand OB.

For any online banking system the major cost goes for setting up a backbone network for a country like Bangladesh it’s a matter of huge investment. Fortunately Bangladesh railway has a high –speed optical fiber network parallel to the railway path owned by Bangladesh railway. Its total capacity is about 2.5 Gbps. This fiber optic covers almost every parts of the country. Hence it can be used as the backbone network of online banking in Bangladesh.

Some of the multinational companies like Grameen mobile phone company, Ranks ITT of Bangladesh have already started to use this high speed optical fiber network and they are providing their services even in rural areas. So we can utilize this opportunity in case of OB in Bangladesh.

After studying in this area I have got the overall scenario of the country’s internet banking state and the obstacles on the way of ramification. It will make a room for me to annex my valuable recommendations.

1.6. STUDY AREA 

Internship is an integral part of our BBA Program. I have done my internship in ‘Trust Bank, Sylhet Corporate Branch, BMA Bhaban, Chowhatta, Sylhet’. I have opted ‘Online Banking of Trust Bank’ as my study area.

1.7. METHODOLOGY

Research goals is to make a feasible study at problems and issues, scrutinize investigate interconnections of multifarious variables that remain surrounded us. Research produces bodies of knowledge; contribute towards the development of literature of the professions and academic disciplines. As a formal investigative process, research takes place at different level of scientific sophistication or kinds of epistemology .So, research in various branches of academic disciplines operate its study through its own different ways. Research in Business Studies focuses on describing, understanding and interpreting business phenomena and processes and how it affects the business entities and the society. This study is based on both primary and secondary data.

PRIMARY DATA:

A structured questionnaire has been used to get data on the demography and the behavior of 50 personal banking consumers of the online banks. The respondents were chosen randomly while they were actively involved in banking transaction.

A structured questionnaire has also been used to get data on the demography and the behavior of 50 personal of Trust Bank consumers of the online banks. Bank personnel were interviewed to collect data on the online banking services offered by the bank.

SECONDARY DATA:

Online bank’s websites had been the sources of getting information on the services offered by those banks. Apart from them, for literature review different scholar’s journals, books and internet had rigorously been used.

DATA ANALYSIS

No statistical tools are used. Only qualitative analysis is duly performed. For social-cost benefit analysis simple mathematical calculations are done to cast the idea to the readers.

1.8. LIMITATION OF THE STUDY

The limitations of my study are-

1. A country like Bangladesh is not so developed in the IT Sector. So I can not give a clear notion of OB of the country.
2. This is not fully online banking because all transactions must be done by bank and customer cannot make any transactions by his home PC.
3. Server utilization is not shown here under different loads.
4. Response time is not measured under different loads.
5. Complete information about how OB thrusts the bottom line of the income statement is not available.

LITERATURE REVIEW

 2.1. INTERNET IN GENERAL:

Digital technology and new communication systems have made a spectacular change in our lives. We are now living in a borderless virtual society. Computers are increasingly used to create, store and transmit information. Multifarious transactions are going on through the information high-way which is universally called internet. When two or more computers are connected a network is created internet.

2.2. ONLINE IN GENERAL:

Online means using a computer or some other information device, connected through a network to access information and services from another computer or information device. Online communication is widely used by businesses, services, individuals, private commercial banks and educational institutions.

2.3. CONCEPTUAL UNDERSTANDING OF ONLINE BANKING:

The very concept of online banking was something that was more prevalent in the technologically developed parts of the world. Online banking as a medium of delivery of banking services and as a strategic tool for business development, has gained wide acceptance internationally and is fast catching up in Bangladesh with many banks entering the fray. So online banking refers to the deployment over the internet of retail and wholesale banking services.

Online banking involves use of internet for delivery of banking products and services which starting from collection of information to assess the need for the customers to feed back collection. The process includes with both back office and front desk operation.

According to the Oxford Dictionary (2004)

‘Online banking is banking transactions carried out electronically, without involving the physical deposit or receipt of cash or checks: maintenance of a bank account by means of computer and telecommunications equipment and software.’

E-banking comprises various formats or technologies including telephone (both land line and cell phones) banking, direct bill payment (electronic fund transferor EFT) and PC or internet banking.

2.4. GLOWING ATTRIBUTES OF INTERNET BANKING:

‘Any time banking, anywhere banking and any place banking’ –are the glowing attributes of online banking system. Online banking is no longer time or location bounded and it offers a large amount of facilities which were absent in traditional banking system. The growing popularity of online banks stems from the fact that their services are much more attractive than those offered by traditional banks. It offers a cost efficient alternative to telephone and branch banking due to the relatively low maintenance and update expenses. It does not require any human interaction at the bank end.

2.5. THE LEVEL OF BANKING SERVICES OFFERED THROUGH ONLINE:

For users, online banking provides 24+hours–a-day access to banking services. The primary services provided by e-banks are any branch transactions, fund transfer, bank statement, paying utility bills and checking account balances. Mobile banking, loans, brokering, share trading, service bundling and a host of other financial services are being added to this primary services.

ONLINE SERVICES	NO OF ONLINE BANKS PROVIDING THESE SERVICES IN BANGLADESH	ONLINE SERVICES	NO OF ONLINE BANKS PROVIDING THESE SERVICES IN BANGLADESH
ANY BRANCH TRANSACTION	24	PROVIDE LC	2
CHANGE OF PASS WORD OR ID	23	POS	10
ATM	22	UTILITY BILL PAYMENT	10
BANK STATEMENT	22	SMS BANKING	5
EFT	12	WEB SHOPING ON INTERNET	5
INTERNET BANKING	11	PHONE BANKING	4

FIG: 01-NO OF BANGLADESHI BANKS PROVIDING DIFFERENT ONLINE SERVICES

Khorshed Khokon (2003) describes these activities in a different way-

‘Customers need an internet access service. As an online banking customer he/ she will be given a specific user Id and a confident password. The customer can then view his account balance via online. To ensure that customer’s personal data can not be accessed by anyone but them, all reporting information has been secured using Version and Secure Sockets Layer(SSL)’

Again a study on “Business Online Banking” in India shows that the level of banking services offered through internet can be categorized into three types:

1. The basic level services are the banks websites, which disseminate information on different products and services offered to customers and members of public in general. It may receive and reply to customers queries through e-mail.

2. Simple transaction websites which allow customers to submit their instructions, applications for different services, queries on their account balances etc, but do not permit any fund–based transactions on their accounts.

3. Business online banking services are branch transactions, fund transfer, bank statement, paying utility bills and checking account balances.

2.6. ONLINE BANKING IN BANGLADESH:

2.6.1. Entrance of Internet:

Internet came late in Bangladesh. In the late 80’s, Bangladesh was repeatedly invited to get connected to the submarine fiber optic information super highway link but she didn’t respond. After that, Bangladesh had no option other than to use satellite uplink with V-SATs, connecting to Hong Kong and Singapore based hubs. First, UUCP e-mail came in 1993. Then IP connectivity came in 1996. In June 1996 the Bangladesh government decided to allow private companies to act as Internet Service Provider (ISPs) using V-SATs. In 1998 the government’s decision to withdraw all import duties and VAT from all computer hardware and software brought the prices of computer down to a level affordable by the middle income house hold in Bangladesh.

2.6.2. Internet in Banking Sectors:

The foreign banks are the pioneers in adopting electronic banking in Bangladesh. Most of the foreign banks are using the computerized transaction system and taking advantage of the superior technology by attracting customers and providing inter-branch and inter-bank linkage. Foreign banks through successful use of a global network have increased the timeliness and accuracy of information, benefiting its customers, employees and also management.

The most extensive use was by the large foreign banks such as the American Express Bank with an emphasis on networks of computers to help with reducing costs and increasing the speed of settlement of transactions. Most of the 28 banks of Bangladesh use computerized system but they do not yet offer online service. Standard Chartered Bank first launched online banking in August, 2000.

2.6.3. Current State of Online Banking in Bangladesh:

To draw an assumption about the current condition of OB, a survey is conducted in 2 national and 14 private banks. Participant banks are Dutch Bangla Bank Ltd, Premier Bank Ltd, First Security Bank Ltd, Dhaka Bank Ltd, The City Bank Ltd, Exim Bank Ltd, Jamuna Bank Ltd, Prime Bank Ltd, NCC Bank Ltd, Eastern Bank Ltd, United Commercial Bank Ltd, Trust Bank Ltd, Uttra Bank Ltd and BRAC Bank Ltd.

The use of online banking in the national bank is zero. Only the service of linking A/Cs online is present in Public Bank, but other services are absent in both the NCBs.

The scenario in PCB is better. Among 14 surveyed banks, four banks (like Premier Bank Ltd, First Security Bank ltd, Dhaka Bank Ltd, Exim Bank Ltd) are only applying minor activities of online banking services.

Linking A/Cs online and foreign exchange rate update-these two services are provided by remaining 10 banks. Besides these, the task of branch transactions, fund transfer, bank statement, paying utility bills and checking account balances can be done through online in these banks.

Financial sector of Bangladesh, like most developing countries, is dominated by banking enterprises. Banks at early stages of history of Bangladesh were nationalized and there was mismatch between assets and liabilities. In the early 1980s, the government of Bangladesh began to reform the financial sector. Private Banks were allowed to enter the market and two nationalized commercial banks (NCBs) were decentralized and another nationalized bank was converted into a limited liability company and partially privatized. Currently, the banking sector comprises of four NCBs, five government-owned specialized banks dealing with development finance in specialized sectors, 30 private commercial banks (PCBs) and ten foreign commercial banks (FCBs) (Ahmad, 2005).

TYPES OF SERVICES	1998	2000	2001
TELE BANKING	14%	20%	24%
ONLINE CORPORATE BANKING	A	8	12
EFT	15.4	15	18
ATM	14	15.4	28
CREDIT CARD	10	23
DEBIT CARD	A	3.8	18
MERCHANT SERVICES TO MERCHANT	A	3.8	12
ONLINE BANKING	B	7.6	12

FIG-03: INTERNET BANKING SERVICE {NOTES: (A) DENOTES DATA UNAVAILABILITY; (B) DENOTES SERVICE UNAVAILABILITY}

NO OF LAND LINES	0.92 MILLION	INTERNATIONAL INTERNET BACKBONE	10 MB
NO OF CELLULAR PHONES	3.5 MILLION	V-SAT PROVIDER	31
PAGING AND RADIO TRUNKING SUBSCRIBERS	7000	V-SAT USER	70
TELEX SUBSCRIBERS	1600	NUMBER OF ISP’s	195
INTERNATIONAL TRUNK EXCHANGE	3	FIBER OPTIC CABLE NETWORK(UNDER RAILWAY)	1800 KM
TOTAL INTERNATIONAL CIRCUITS	3700	INTERNET USERS	0.1 MILLION

FIG-04: TELECOMMUNICATION STATUS IN BANGLADESH

PARTICULARS	NCBS	PCBS	FCBS
COMPUTERIZED BRANCHES	37	51	100
NO OF BRANCHES LINKED WITHIN BRANCHES	7	12	26
NO OF BRANCHES LINKED WITH OTHER BRANCHES	1058	39	81

FIG-05: COMPUTERIZED BRANCHES IN DIFFERENT TYPES OF COMMERCIAL BANKS

Sonali Bank is the largest among the NCBs while pubali is leading in the private ones. Among the 12 foreign banks standard chartered bank has become the largest in the country. Besides, the scheduled banks, Samabai (cooperative bank), Karmasansthan (employment) Bank and Grameen Bank are functioning in the financial section. The number of scheduled commercial banks is 6,271 as of december 2002. Of the branches, 39.95 per cent are located in the urban and 60.05 per cent in the rural areas. Of the branches, NCBs hold 3,608, PCBs 1,331 and specialized banks 1,298 (annual report, BB, 2002-2003).

Bangladesh Bank (BB) has been working as the central bank since the country's independence. It has legal authority to supervise and regulate all banks. It performs the traditional central banking roles of currency issuing and of being banker to the government and banks. It formulates and implements monetary policy manages foreign exchange reserves and supervises banks and non-bank, financial institutions. Its prudential regulations include: minimum capital requirements, limits on loan concentration and insider borrowing and guidelines for asset classification and income recognition. BB has the power to impose penalties for non-compliance and also to intervene in the management of a bank if serious problems arise. It also has the delegated authority of issuing policy directives regarding the foreign exchange rule.

Under the light of the above discussion it is clear that in Bangladesh online banking in Bangladesh is in infancy state and used on very limited banks.

2.7. CONSUMER BEHAVIOR OF ONLINE BANKING:

This study reveals that two types of consumers of the online banking in Bangladesh.

REASONS	USAGE RATE (%)
NOT ADEQUATE SERVICE	45.8
DON’T NEED TO ACCESS ONLINE BANKING	29.2
UNABLE TO OPERATE	12.5
NOT AWARE	12.5

FIG-06: REASON BEHIND NOT USING ONLINE BANKING

Who uses the online banking services and another group who doesn’t use the online banking First group consists 84% and second group consists 16%.

From the above table we see that 45.8% respondents informed that online service is not adequate and 12.5% of the respondents are not aware about online banking. So we may conclude that online banking is now in the primitive stage but has an acceleration growth.

ONLINE SERVICES	USAGE RATE (%)	ONLINE SERVICES	USAGE RATE (%)
ANY BRANCH TRANSACTION	7.2%	PROVIDE LC	A
CHANGE OF PASS WORD OR ID	A	POS	33.3
ATM	99.6	UTILITY BILL PAYMENT	7.9
BANK STATEMENT	4	SMS BANKING	7.9
EFT	9.9	WEB SHOPING ON INTERNET	A
INTERNET BANKING	15	PHONE BANKING	A

FIG-07: SERVICES USED BY USERS

NOTES: (A) DENOTES SERVICE NOT AVAILABLE

Out of 300 consumers of online banks 252 (85.3%) are male and 48 (14.7%) are female. In comparison of user and non-user based on gender, female 22.9% are found non user which is nearly 10% greater than user’s family.

VARIABLES	CATEGORY’S	COMBINED		USERS		NON USERS
		FREQUENCY	%	FREQUENCY	%	FREQUENCY	%
GENDER	MALE	256	85.3	219	86.9	37	77.1
	FEMALE	44	14.7	33	13.1	11	22.9
PROFESSION	BUSINESS	93	31	82	32.5	11	22.9
	SERVICE	123	41	95	37.7	28	58.3
	STUDENT	70	23.2	64	25.4	6	12.5
	HOUSE WIFE	14	4.4	11	4.4	3	6.3

FIG-08: DEMOGRAPHY OF USERS AND NON-USERS OF ONLINE BANKING SERVICES.

Business & service groups are the dominant users of online banking among the professionals that belongs to 32.5% and 37.7%.We may expect that with in very near future the using rate will be reached in a satisfactory level.

2.8. FACTORS AFFECTING ADOPTION OF ONLINE BANKING:

Factors promoting or hampering the adoption of IT applications are numerous and have been a prime concern for many researchers and practitioners. In this rich variety of literature adoption fact ors were sometimes examined in the specific context. Both internal and external factors must be taken into account when tying to understand a firm’s criterion for deciding about technology.

Consumer Awareness:

One of the more important characteristics for adoption or acceptance of any innovative service or product is the creation of awareness among the consumers of the product or services. Consumer go through a series of process in knowledge , conviction, decision, confirmation before they are ready to adopt the product or service and the adoption or rejection begins when the consumer becomes aware of the product or service.

Ease of Use:

However awareness alone is not sufficient since consumers would reject an innovation if it was very complex and not user friendly. In this context ease of use of innovative product or service as one of the three important characteristics for adoption from the consumer perspective. First one, complexity-the degree to which the innovation is relatively difficult to understand or use. The user friendliness of domain names as we’ll as the navigation tools available in the website is an important determinant for ease of use. The design of the web sites with appropriate use of graphical user interface is also considered as an important determinant.

FIG-09: FACTORS AFFECTING ADOPTION OF ONLINE BANKING

Trust, Security and Privacy:

These are very important factor for adoption of a new technology. Kenneth C. Laudon and Jane P. Laudon had said

‘E-commerce can not flourish unless there is an atmosphere of trust among buyers, sellers and other related person involved in the online transaction’.

Techno Phobia:

Consumers lacking of technological knowledge trust human beings more than the computers and machines. Their fear for computers and technology generally grows and eventually develops into a phobia for a technology. Thus technology phobia can also be a factor affecting the customer’s reluctance to opt for online banking.

Echnology Experience:

Prior technology experiences, especially prior computer experience have been found to impact consumer’s beliefs about related systems and information technology. The more experience consumer has about technology, the better will she understand new technologies and their ramifications. Thus, consumer’s familiarity with technologies general facilities her appreciation of the potential added value which is inherent in a technology.

Personal Banking Experience:

Satisfied bank customers have more positive perception also about online banking and, thus, are to move more likely to online. A dissatisfied branch office customers may try online banking but only a satisfied customers adopt online banking as their regular bill payment code.

Reluctance to Change:

For customers to change their presents ways of operating and to take up new technology, it must fulfill a specific need .unless such a need is fulfilled, consumer may not be prepared to change the present ways of operating.

Preference for Personalized Services:

A vast majority of bank customers would still like to opt for personal interaction when doing their bank transactions. The personal touch of officers and managers adds value to each transaction. In the context of Bangladesh, a personal relationship between customers and bankers transcends many boundaries especially so in the rural areas.

Cost of Adopting the Innovation:

In online banking, two types of costs are involved. First, the normal costs associated with internet access fees and connection charges and secondly the bank fees and charges. If consumers are to use new technologies, the technologies must be reasonably priced comparative to alternatives. In view of the Bangladeshi government’s encouragement towards the digital era essential costs have been kept at a minimum level.

Availability:

The wider spread the access to computers and the internet, the greater the possibility of online banking.

Web Context and Design:

Product information content, the amount of product information, product information format, language and layout features affect customers satisfaction.

Reference Group Influence:

The consumption of banking services may be influenced by several reference groups of the customers such as the personnel of the bank and the traditional ones such as friends and family. Reference groups do influence the adoption of online banking.

Dealing With Erroneous Transaction:

In addition, online bank customers would also be curious to find out how the bank would generally deal with erroneous transactions occurring in online transactions. Will the burden of proof be on the customers or on the bank would be willing to settle the issue up front and investigate the problem latter.

Transactions Accuracy Speediness:

There is a significant correlation between web-site down load speed and web user satisfaction. In this context, the use of high resolution graphics and inefficient web servers has a significant negative impact. As Bangladesh web services are at infancy state, this factor may not play a major role in adoption decision.

Demographics:

High income, relatively young age and good education have been found explaining the acceptance of online banking. Older consumers are found to have problems with new technologies, and hence, are expected to have negative attitudes toward innovations. Some studies argue that the online functions are male dominated.

2.9. MOMENTOUS OF ONLINE BANKING OVER TRADITIONAL BANKING:

The online banking gets momentous over traditional banking due to following conspicuous dimension on OB-

ü The transformation from traditional, bricks and mortar to e-banking has been momentous. The facility of accessing their accounts from anywhere in the world by using home computer with internet connection, is particularly fascinating to Non-resident Bangladeshi and High net worth individuals having the multiple bank accounts

ü When it comes to cost aspect, cost per transaction through internet is less than that of telephone transactions or that of physical branch transactions.

According to a study of Booz, Allen and Hamilton (1997), - ‘The cost of a full-service teller transaction is $1.07; a telephone transaction is 154 cents; an automated teller machine transaction is 27 cents & a software based PC transaction is 1.5 cents. But online based transactions cost banks only a penny.’

YAKHLEF (2001) REPORTS ‘A TRADITIONAL PAYMENT COSTS $1.08, WHEREAS ON THE INTERNET THE COST IS 13 CENTS OR LESS.’

ü Online also offers banks the opportunity to better meet customer needs through enhanced interaction, data mining and customization.

ü It does not require any human interaction at the bank end.

ü The advent of smart cards has made it possible to enable transactions in the virtual world as well as physical world using electronic cash. The motto of the online banking is

‘Any time banking, anywhere banking, any place banking’.

ü Each online user would be 50%-250% more profitable than the average banking customers and online customers will be some of the banking system’s more profitable customers representing close to30% of all retail banking profits.