management information system at the city bank limited bangladesh

Abstract

Keywords:E-Banking, Internet Banking, Banking Technology, i-bank, The City Bank Ltd.

Internet Banking or E-Banking applications offer wide benefits to customers and banks and it is now no longer a “nice to have” but an “impossible to survive without” for all banks. “Internet Banking” refers to systems that enable bank customers to access accounts and general information on bank products and services through a personal computer (PC) or other intelligent devices. Numerous factors including competitive cost, customer service, and demographic considerations – are motivating banks to evaluate their technology and assess their electronic commerce and Internet banking strategies. The challenge is to make sure the savings from internet banking technology more than offset the costs and risks associated with conducting business in cyberspace. Most of the banks do not offer online or electronic service such as Direct Deposit. Bangladesh Government is developing the IT infrastructure, computer literacy, etc. This will encourage the banks to expand Internet Banking facilities from their current level of 12% of the services provided through internet. The latest e-solution to The City Bank customers is City i-bank Online Banking. This paper intends to give an idea of what a fully fledged internet banking service may provide and find out its viability for local banks and The City Bank in Bangladesh. From the customer point of view the overall improvement in education especially computer literacy and the expanding vast network of ISPs will make an enabling environment to make the customer feel safe for banking through internet.

1.0 Introduction

E-banking application in Bangladesh |A case study on: The City Bank Ltd.

For decades, banking analysts have been predicting the coming of the cashless and

chequeless economy as more and more payments are made electronically. In the American

Banker’s Century Edition, Marianovic (2000) wrote, “In 1963, Dale L. Reistad of the

American Bankers Association said at the first ABA National Operations and Automation

Conference that we would be a checkless society by 2000. By the middle of the 1990s,

Internet fever was rampant in the United States and it intensified as the decade wore on.

The exponential growth in Internet-related, non-financial activity such as e-mail fueled

predictions of dramatic future growth in Internet-based banking and payments.

A 1995 Business Week cover story, “The Future of Money1” cited predictions that the

number of electronic purchases would grow more than seven-fold by the year 2000 and

that by 2005; nearly 20% of all purchases would be made electronically. Internet Banking

is one of the few web applications where benefits to customers and banks are already

widely proven. It is now no longer a “nice to have” but an “impossible to survive without”

for all banks. “Internet Banking” refers to systems that enable bank customers to access

accounts and general information on bank products and services through a personal

computer (PC) or other intelligent devices. Internet banking means a kind of self-help

financial services provided by the bank for its clients by the medium of Internet, including

account information inquiry, account transfer & payment, online payment issues in

Internet Banking.

Sound management of banking products and services, especially those provided over the

internet, is fundamental to maintaining a high level of public confidence not only in the

individual bank and its brand name but also in the banking system as a whole. Key

components that will help maintain a high level of public confidence in an open network

environment include:

Security: Banks must have a sound system of internal controls to protect against

security breaches for all forms of electronic access.

Authentication: Transactions on the internet or any other telecommunication

network must be secured to achieve a high level of public confidence. In cyberspace,

as in the physical world, customers, banks, and merchants need assurances that


they will receive the service as ordered or the merchandise as requested, and that

they know the identity of the person they are dealing with.

Trust: Public and Private key cryptographic systems can be used to secure

information and authenticate parties in transactions in cyberspace. A trusted third

party is a necessary part of the process. That third party is the certification

authority.

Non-repudiation: Non-repudiation is the undeniable proof of participation by both

the sender and receiver in a transaction. It is the reason public key encryption was

developed, i.e. to authenticate electronic messages and prevent denial or

repudiation by the sender or receiver.

Privacy: For the case of internet banking personal information is very confidential.

So the information should be very much private. The banks should ensure the

privacy of all these information.

Availability: The bank should maintain their service at every moment. The

customers of internet banking are time conscious and time is much more important

to them. So the service should be available all the time.

1.1 Objectives of the Study

The objectives of this study are:

To assess the existing e-banking scenario in Bangladesh; and in The City Bank

Limited as well.

To explore the prospect of E-Banking in Bangladesh context.

1.2 Methodology of the Study

1.2.1 Data


Secondary data was derived from various resources, such as The City Bank Limited’s

official websites, annual reports; and many other banks’ websites. As to maintain the

informational sufficiency of the report, some research papers were used to derive

secondary information and data.

1.2.2 Limitations of the Study

Interviewing target respondents adopted convenience sampling as alternative to random

sampling, at some phases where respondents were inaccessible or not available, and

unreachable because of unavoidable nation-wide messy circumstances. Bank officials were

found too busy and also reluctant to talk without a proper written permission from the

competent authority.

2.0 Literature Review

Electronic banking does not mean only 24-hours access to cash through an Automated

Teller Machine (ATM) or Direct Deposit of pay checks into checking or savings accounts as

many consumers may think. Electronic banking (e-banking) involves many different types

of transactions; it is a form of banking where funds are transferred through an exchange of

electronic signals between financial institution, rather than exchange of cash, cheques or

other negotiable instruments. With the expansion of global Information and

Communication Technology (ICT) infrastructure and the internet, e-banking is set to play a

pivotal role in the national economic development of any country. But appropriate

software, technology, infrastructure, skilled manpower and cyber law are crucial for the

implementation of e-banking in the country.

Academics have defined e-banking in different ways. Gerrard and Cunningham have

described electronic banking as an umbrella term for the process by which a customer may

perform banking transactions electronically without visiting a brick and mortar institution

(Gerrard and Cunningham, 2003). Personal banking, virtual banking, on line banking, home

banking, remote banking, and phone banking are one or other form of e-banking. The ‘on


line e-banking system’ gives every body the opportunity for easy access to their banking

activities. e-banking activities include retrieving an account balance, money transfers1 and

retrieving an accounting history. In e-banking banks provide also services like stock

market transactions, submission of standardized accounting payment files for bank

transfer to third parties, etc.

With continuous innovation of computer technology and telecommunication, new financial

distribution channels are rapidly increasing both in numbers and form. Some of them are

ATM, telephone banking, PC banking and internet banking. However, for full utilization of

the ebanking a broad range of distribution channels must be available to deliver needed

services to the customers. Developing alternative distribution channels is not only

important to reduce costs and improve competitiveness but also to retain the ability to

serve the existing customers satisfactorily as well as to attract new customers (Kimball and

Gregor, 1995). Sathye (1999) forecasted that the Internet Banking will be significantly

influenced by variables like security system, awareness of the user about the services,

benefits of the system, reasonable price, availability of infrastructure and resistance to

changes.

Greater the level of awareness among customers the higher is the adoption of the e-

banking. For success, the services provided by the banks should be innovative, have high

quality, be user friendly and meet expectation of the individual customer. From customer’s

perspective the uses of innovate products or services depends on three important

characteristics (Nsouli and Schaechter, 2002). These are (i) user friendliness, (i) ease of

navigation and (iii) simplicity of the service. E-banking is the wave of the future. It provides

enormous benefits to consumers in terms of ease and cost of transactions.

Internet Banking enables a client to handle his accounts from a computer at home or in the

office. The main features of Internet Banking systems are high level of security, comfort,

simplicity, openness, wide communication possibilities, networking, automated data

transmission and signature specimen. Providing Internet Banking services to its clients the

corresponding bank must have ICT facilities and specific computer program for banking.


Similarly, to use Internet Banking’ services, the clients of the bank must have Internet

connection and a corresponding computer program on their computers. Internet Banking

is capable to provide maximum services to the clients. It makes possible to send account

statements of the clients’ at agreed frequencies to the mailboxes of their clients.

Nevertheless, Internet Banking could not be used for complex operations. Any banking

service provided by means of computer-controlled systems based on ICT that does not

directly involve bank's usual branch is called virtual banking (Allen,

Catherine and Barr, William J., Chicago, 1996).

Credit and Debit cards are two very important instruments of e-banking system. Banks

supply credit cards to the clients having enough deposit in the bank. Credit card is used for

repayment of the value of products and services. Credit card helps to withdraw cash money

for payment (Block, Valerie: 1999). Debit card is used for electronic fund transfer. Debit

card holds magnetic sign number issued by the bank (Ashurst, Mark, 1996). Transaction is

possible determining magnetic numbers by machine. Money can be withdrawn from

deposit account and transferred by this card.

Economies with high unemployment and illiteracy rate have difficulties to introduce e-

banking, because application of e-banking cuts jobs (Licker and Mollah). Besides, the

societies inclined to think and handle traditionally slow down the introduction of the e-

banking. Generally, people wish to have their private affair secret; anything that threats

personal secrecy is opposed by the people in general. e-banking makes such impression

that secrecy of the people are under threat (Kimball and Gregor, 1995). Hence, protective

measures can be taken by e-banking innovations.

3.0 E-Banking in Bangladesh

3.1 E-Banking products and services in Bangladesh


A broad spectrum of e-banking services, a subset of electronic finance is available in

Bangladesh with different degree of penetration.

Internet Banking products and services can include wholesale products for corporate

customers as well as retail and fiduciary products for individual customers. Ultimately, the

products and services obtained through internet banking may mirror products and

services offered through other bank delivery channels. Some examples of wholesale

products and services include:

• Cash management

• Wire transfer

• Automated clearinghouse transactions

• Bill presentment and payment

Examples of retail and fiduciary products and services include:

• Balance inquiry

• Funds transfer

• Downloading transaction information

• Bill presentment and payment

• Loan applications

• Investment activity

• Other value-added services

Other internet banking services may include providing internet access as an Internet

Service provider (ISP). Historically, banks have used information systems technology to

process checks (item processing), drive ATM machines (transaction processing), and

produce reports (management information systems). In the past, the computer systems

that made the information systems operate were rarely noticed by customers. Today, web

sites, electronic bill presentment and payment systems are an important way for banks to

reach their customers.

3.2 Status of Bangladesh in Adopting Banking Technology


It is imperative for the Bangladeshi commercial banks to embrace the latest technological

changes in offering banking services. More and more banks are now using different

software to do their banking operations, which has established the arguments in favor of

using technology. Many Bangladeshi commercial banks initially started with some locally

produced banking software. However, some of them started with advanced foreign

software. These software enable the banks with more customer orientation and flexibility.

It is evident from Table 1 that the banking sector of Bangladesh has recognized the

necessity of introducing new technology in this arena.

The widely used banking software in Bangladesh commercial banks at present are PC Bank

(12 banks), BEXI Bank (7 banks), infinity banking solutions (4 banks), Micro Banker (2

banks), and flexcube (2 banks).


4.0 E-Banking with The City Bank Ltd.

The City Bank’s e-banking service—known as ‘City i-Bank’, is now offering ‘single click

banking’ to its customers. This single click banking simply facilitates:

View Account SummaryView Account DetailsPrint StatementCheque Book InquiryView Standing Instruction

The city bank also incorporated many user tips to help the customers’ better adopt and be

facilitated from internet banking. The user tips are:

For getting this service, customers have to fill out the form correctly Secret question and answer have to be filled out by the applicant, and he/she

should not disclose that to anyone Within 4 working days after submitting application form, bank will inform

the customer his/her ID & Password After getting ID & Password, users have to go to the website

http://www.thecitybank.com for log in to i-Bank service

After first log in, user must change password for future use User can check his account summary; account detail; can query about his/her chequebook; can view his/her standing instruction of the account; can take printouts of statement and he/she can change password when needed

User must remember the secret question & answer which he/she has noted in application form. The secret question & answer will be needed for activating or deactivating his/her i-Bank account and for password retrieval (if password forgotten or lost)

Users can use this service using any web browser (like Internet Explorer; Netscape Navigator; Mozila etc.)

Users can access his/her i-Bank account from anywhere of the globe, anytime

Users can also access his/her i-Bank account using mobile phone (only GPRS, EDGE & WAP enabled phone).


4.1E-Banking services provided by The City Bank:

The city bank ltd. lately introduced some key e-banking services which can be

proven as a great competitive advantage for the company itself. Those are:

Any student going abroad for higher studies needs to submit some documents

confirming his admission / offer at foreign educational institution, passport etc to

City Bank branches. City Bank, keeping all the attested photocopies, opens a ‘City

Student file’ in the name of that particular student. To meet all the foreign currency

requirements related to his/her education & accommodation under that admission,

City Bank then remits to the institution (or in favor of him/her) the foreign

currencies as the file opening bank.

Eligibility & Key Features

Eligibility

Any Bangladeshi passport holder student can apply for City Student FileNeeds to have an account relationship with City Bank

Key Features

Same day processingFaster and reliableNo hidden costLarger branch networkDedicated ‘Student Service Center’ at Banani

Any patient going abroad for treatment purposes, needs to submit all the necessary

documents to City Bank, such as appointment letter including invoices from

hospitals abroad and a referral letter from the concerned physician in Bangladesh.

City Bank, keeping all the attested photocopies, opens a ‘City Medical File’ in the


name of that particular patient. City Bank then remits to that hospital the foreign

currencies as the patient’s file opening bank. By opening medical file, a patient can

meet his/her financial requirements for treatment abroad.

Eligibility & Key Features

Eligibility

Any Bangladeshi passport holder patient can open the 'City Medical File'Needs to have an account relationship with City Bank

Key Features

Same day processingFaster and reliableNo hidden costLarger branch networkDedicated 'Medical Service Desk' at Banani

City WalletCity wallet is the first mobile banking application that allows you to have facilities in

your handset menu option. If you have a JAVA enabled cell phone with internet

access, you are no longer required to typing in the keywords in order to get sms

banking services. Instead, you will go to the menu option of your handset & have it

ready there-always.

Among all the i-bank services of city bank the most phenomenal work done is by

introducing American Express® in Bangladesh. And also, the city bank’s online ATM

locator application has attracted many customers.

5.0 Challenges of e-banking in Bangladesh for The City Bank Ltd.


Generally it is believed that banks in Bangladesh are facing different problems adopting e-

banking. Inefficiency and lack of adequate knowledge of the top management of the last

generation about e–banking may have to be put at the first place. The top management set

the way for future development. For the change they must have understood its significance

and prospect. Only so, proper strategic plan could be done, appropriate adjustment with

changing national and international business and technological environment could be

made, the coming challenges from the national and international competition successfully

faced, and the market share retained and gained.

The lack of communication channel and technological and technical infrastructure support

may be seen as the second crucial challenges of e-banking in Bangladesh. It is not enough

that there are enough communication channels, but they must be efficient, competitive,

competent, cost effective and supportive to the services. In the millennium of ICT every

nation has to think global, so worldwide efficient networking and WAP have to be ensured.

Ensuring mature technology is also very important for successful introduction of the e-

banking which includes adequate software. Modern technology is available but frequently

very costly, but the countries like Bangladesh have other decisive comparative advantages

that could be used to compensate the cost of the modern technology. In this way, the

modern technology could be made economically viable, cost-effective and competitive even

in the world market.

Qualified human resource is another factor that has to be considered, which means experts

have to be made available in the market. In the long run such services can not be made

competitive with hired or imported human resources. So, respective educational institutes

must be established for the supply of the experts for the management of the hard- and

software of the sectors. It is expected that a part of the existing employees both fromthe

rank and file may resist the change. To motivate and integrate them in the change, training

and reorientation program must be launched.

Security of the services is very important to popularize it. To protect the service from piracy

and fraudulency reliable security systems must be ensured. In this regard, government,


banks, and Bangladesh Bank must work together. So and so, ways and means must be

found to protect fraud and money laundering but at the same time ensuring fund

transferring.

The success of the e-banking depends on the acceptance of the services by the clients of

banks. So the users of the service must be made aware of it. First of all the services must

cost effective and financially genuinely attractive to the clients. The technology and the

services must be cheap, user-friendliness, easy to navigate, and simple to use.

The success of the e-banking depends on the market size because the investment must also

be economically viable to the banks. In this relationship, the size of population of

Bangladesh with 155 million people should be considered as encouraging. However, they

must have a minimum literacy grade to use the user-friendly services of e-banking. The

literate and half-literate people must the employed and earn a minimum income to have

interest in the e-banking services. The success of e-banking in Bangladesh or anywhere else

depends on the level of economic and social development standard. It means, however, not

that one must wait for another; on contrary one should help the progress of other.

6.0 Advantages of E-Banking in Bangladesh

There were a substantial number of educated unemployed youth forces, with ability

to read and write English exist in the country. They trained within a required skill in a

short time.

Short-term benefits

Reduce extra time; Increase productivity and efficiency; Eliminate duplication and

wastage; Cut down maintenance, and shortage cost; Curtail security cost

Long-term benefits


Create new opportunities of jobs for jobless; participate in the country’s economic health;

proper planning and monitoring; Proper use resources.

Job creation

According to Bangladesh Bureau of Statistics, the number of unemployed people in

Bangladesh in 1990 -2001 was 1.0 million. Among them 0.2 million are male and 0.8

million female, at the rate of unemployment was 1.1 which was extended 1.9. The

issue of computers eliminating jobs of people was quite emotional and painfully real.

But it has two sides that automation will eliminate certain types of job like record

keeper and also created jobs like administrator, system analyst, programmer, operator

etc. And helped to reduce unemployment problem.

Contribution to GDP

Banks with a national economy, work towards building national capital, increasing

national savings and mobilizing investments in trade and industry.

Benefits from the banks’ point of view

From the banks’ view point, the first benefits for the banks offering e-banking

services was better branding and better responsiveness to the market. The other

benefits were possible to measure in monetary terms. The main goal of every company

was to maximize profits for its owners and banks were not any exception. Automated

e-banking services offered a perfect opportunity for maximizing profits.

Benefits from the customers’ point of view

The main benefit from the bank customers’ point of view was significant saving of time

by the automation of banking services processing and introduction of an easy

maintenance tools for managing customer’s money. The main benefits of e-banking

were as follows:

Increased comfort and timesaving-transactions made 24 h a day, without requiring the

physical interaction with the bank. Quick and continuous access to information.

Corporations had easier access to information as, they checked on multiple accounts at the

click of a button.

Better cash management. E-banking facilities speed up cash cycle and increases

efficiency of business processes as large variety of cash management instruments is

available on Internet sites of banks.


Private customers looked for slightly different kind of benefits from e-banking.

Reduced costs: This was in terms of the cost of availing and using the various banking

products and services.

Convenience: All the banking transactions performed from the comfort of the home or

office or from the place a customer wants to.

Speed: The response of the medium was very fast; therefore customers actually waited till

the last minute before concluding a fund transfer.

Fund’s management: Customers downloaded their history of different accounts and do

a “what-if” analysis on their own PC before affecting any transaction on the web.

7.0 Conclusion

In a developing country like Bangladesh, The City Bank has done quite well from e-banking

service perspective. However, the mobility of the ATM service and other e-banking service

from The City Bank is still comparatively lacking to remain in the competition with some

fast growing commercial banks in Bangladesh. Thus, the bank must ensure there mobility

goes beyond local regions of this country to become a major force in e-banking.

Eventually from the aspect of e-banking in Bangladesh, successful introduction of the e-

banking will expedite the economic and social progress of the country. Government should,

therefore, establish or facilitate the establishment of the required educational institution

and favourable legal and environmental framework for the e-banking. In brief the study

leads to conclude that in view of the technology transfer, the world could not be divided

according to the development status of developed and developing countries. Just on the

contrary, modernization of the economy through transfer and adaptation even of the most

developed technology help ultimately expediting the economic progress and removing the

development gap between developed and under developed countries.

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Websites:

https://www.thecitybank.com.bd/home.php


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http://www.bdresearchpublicaions.com/admin/journal/upload/09164/09164.pdf

management information system at the city bank limited bangladesh

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