Electronic B anking Md Sajib Hossain, Lecturer , Department of Finance,DU
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Electronic Banking
Md Sajib Hossain, Lecturer, Department of Finance,DU
7/28/2019 Electronic Banking 01
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Electronic Banking
• Electronic Banking is transforming the financial services
industry through various impossible innovations. Electronic
banking allow banks to expand their markets for traditional
deposit taking and credit extension activities, and to offer new
products and services or strengthen their competitive positionin offering existing payment services.
• It is about performing banking through electronic means.
Doing all the activities of a bank with itself and providing
banking services through electronic or digital method likeinternet, mobile phone, ATM , telecommunication network ,
SMS banking etc.
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Basic Features of E-Banking
• All branches connected with central server for 24 hours a day and 365
days in a year.
• Customers can perform banking transactions from any branch located at
any place.
•
Customers gets banking services through electronic delivery channels onthe basis of 24 X 365 hours.
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Scope of Existing Electronic Banking in
Bangladesh• Internet Banking
• Automated Teller Machine
• Mobile Banking
• Electronic Fund Transfer like BEFTN
• SWIFT
• Tele banking
• SMS banking
• Banking Kiosks
•
Point of Sale ( POS) Terminal• Others
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Benefits of Electronic Banking
• 24 hours access
• Fast transactions
• Paperless transactions
• Convenience
• Worldwide access
• Allow transaction from any delivery channel
• Allow plastic money /E-cash /Digital cash
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Infrastructure requirement for E-
banking• Computer network and data communication
• Integrated Core banking software/ solution
• Hardware platform
• Proper manpower with ICT knowledge and skills
Additional Infrastructure requirements
ACHS
National Payment Gateway
ICT act or Cyber law
E- business
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Internet banking
• In Internet banking , a channel of e-banking, customer is given
a specific user ID and a confidential/secret or secured
password so that they can access to their own account.
• Bank offers e-banking in two main ways: First an existing bank
with physical offices can establish a Web site and offers its
customers internet banking in addition to its tradition banking
• Second bank can be established as virtual or “internet bank”
only
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Internet banking
• Internet banking offerings provided by banks can broadly be
grouped in three groups with distinct risks profile:
Information
Communicative
Transactional
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Different Delivery channel of online banking and
current status in Bangladesh
Source :BIBM Survey ,2011
Type Basic Intermediary Advanced
Informational Electronic
Brochure, Contract
us
Search Engine,
report download
Discussion group
Transactional Open account Balance statement,
bill payment
Non branch bank
Customer
relationship
E-mail Calculation,
software download
Videoconferencing
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Security with Internet banking
• Providing internet banking requires high level of
security. For example DBBL data center is equipped
with world’s no networking equipment from CISCO
such as switch , router and PIX firewall.• Any customers requiring internet banking services
must pass throw two firewalls such as Check Point
Firewalls and CISCO firewalls.
• Log in ID is mapped with User ID along with setting
the transaction limit
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Internet banking services in
bangladesh• Accounts summary
• Accounts Details
• Account activity
• Transfer of funds
• Third party Transfer
• Pay Bills
• Standing instructions
• Open/Modify term deposits
•
Loan repayments• Statement request
• Open FDR
• Cheque book request
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Internet banking services in
bangladesh• Stop payment cheque
• Interest rate and Foreign exchange rate inquiry
• Re-fill prepaid card
• Change password
• L/C and BG
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Automated Teller Machines:
An automatic teller machine or automated
teller machine (ATM) is an electronic device
which allows a bank's customers to makecash withdrawals and check their account
balances at any time without the need for a
human teller. Many ATMs also allow people to
deposit cash or cheques, transfer money
between their bank accounts or even buy
postage stamps.
ATM
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ATM
• When an individual withdraw cash from your ATM, this information goes
to the host processor through a dedicated telephone line, which then
routes the transaction request to the cardholder's bank or the institution
that issued the card. The host processor causes an electronic funds
transfer to take place from the customer's bank account to the host
processor's account.
• Once the funds are transferred to the host processor's bank account, the
processor sends an approval code to the ATM authorizing the ATM
machine to dispense the cash requested. The processor then ACHs the
cardholder's funds into the merchant's bank account, usually within 12 to
24 hours.
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How Do ATMs Work?
An ATM is simply a data terminal with two input and four output
devices.
the ATM has to connect to, and communicate through, a hostprocessor.
ATMs connect to the host processor through a normal phone line.
The host processor may be owned by a bank or financial institution,
or it may be owned by an independent service provider.
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Parts of an ATM
Card reader - The card reader captures
the account information stored on the
magnetic stripe on the back of an
ATM/debit or credit card. The host
processor uses this information to routethe transaction to the cardholder's bank.
Keypad - The keypad lets the
cardholder tell the bank what kind of
transaction is required (cash withdrawal,
balance inquiry, etc.) and for what
amount. Also, the bank requires the
cardholder's personal identification
number (PIN) for verification.
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Parts of an ATM
An ATM has four output devices:
Speaker - The speaker provides the
cardholder with auditory feedback when
a key is pressed.
Display screen - The display screenprompts the cardholder through each
step of the transaction process.
Receipt printer - The receipt printer
provides the cardholder with a paper
receipt of the transaction.
Cash dispenser - The heart of an ATM
is the safe and cash-dispensing
mechanism. The entire bottom portion of
most small ATMs is a safe that contains
the cash.
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An example of the
front of a typical
debit card:
1. Issuing bank logo2. EMV chip
3. Hologram
4. Card number
5. Card brand logo6. Expiration date
7. Cardholder's
name
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An example of the reverse side of a
typical debit card:
1. Magnetic stripe
2. Signature strip
3. Card Security
code
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Point of Sale ( POS)
• Usually the banks distribute the POS terminals to big hotels ,
departmental shops where the customers frequently visits.
• This is small electronic device connected with
the banks' database through switching software.
• Both merchants and the customers should
have a account in the bank.
The bank may charge a fee to both customers
and the merchants forthis type of service.
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Benefits of POS• To a merchant POS can provide
1. manage inventory
2. Manage markdowns or promotions
3. Track promotions
4. Reduce paper work
5. Faster transaction6. Accuracy
7. Analysis
• Disadvantages of POS1. Connection reliability
2. Web-based POS fee
3. POS software up gradation
4. Hardware could cause problems