Internship Report On: "Online Banking System of Dutch-Bangla Bank LTD."
Internship Report On: "Online Banking System of Dutch-Bangla Bank LTD."
Internship Report On: "Online Banking System of Dutch-Bangla Bank LTD."
On
"Online Banking System of Dutch-Bangla Bank Ltd.
-A Case study on Elephant Road Branch
Internship Report
On
"Online Banking System of Dutch-Bangla Bank Ltd.
-A Case study on Elephant road Branch
Supervised By:
Mohammad Saifuddin
Lecturer
Department of Business Administration
Bangladesh University
Prepared By:
Hridoy Chandra Sarker
ID: 201031127090
Batch: 27th
Major: Finance
Program: B.B.A
Dept. of Business Administration
Bangladesh University
Letter of Transmittal
_____________
Professor Tofail Ahamed
Head of the Department.
Department of Business Administration,
Bangladesh University
Certification of Supervisor
________________________
Mohammad. Saifuddin
Lecturer
Department of Business Administration,
Bangladesh University
Declaration
___________________
Hridoy Chandra Sarker
ID: 201031127090
Batch: 27th
Major: Finance
Program: B B A
Bangladesh University
Acknowledgement
In the process of preparing this report, I received genuine cooperation from number of
individuals whose names are not possible to mention in this report but I would remember
them with my heart felt appreciation and gratitude.
First of all, I am very much grateful to Almighty Goad who gave blessings, courage and
ability to prepare this report. I am very much grateful to Md. Saifuddin, lecturer of the
Department of Business Administration, Bangladesh University, for guiding me to
complete my internship program. I am also highly indebted to him for his scholarly and
constructive suggestion which was of much assistance to prepare this report.
During the course of internship program I have received cooperation from a number of
employees of Dutch-Bangla Bank Limited. Specially, I would like to thank them all for
guiding me to prepare the report.
Executive Summary
Dutch-Bangla Bank Limited (DBBL hereafter) claims itself to be the most innovative and
technologically advanced bank of Bangladesh. Indeed, DBBL stands to give the most
innovative and affordable banking products to its customers. Online banking at per
international standard is yet to be developed in Bangladesh. Online banking, now- adays, has become the demand of time.
Transactions in online banking are performed within closed network for which the
customer use specialized software provided by the respective bank. Online banking
facilities are expanding in Bangladesh. At present, 29 scheduled banks offer any branch
banking facilities through their respective bank online network that provides facilities
like transaction through any branch under the respective bank online network; payment
against pay order or pay order encashment, demand draft encashment, opening or
redemption of FDR from any branch of the same bank; remote fund transfer, cash
withdrawal, cash deposit, account statement, clearing and balance enquiry within
branches of the same bank; and L/C opening, loan repayment facility to and from any
branch of respective bank under its own online network.
This report contains six chapters:
1st chapter (Introduction) includes: Origin of the Report, Objectives of the Study,
Methodology and Limitations of the Study.
2nd chapter (Overview of Dutch-Bangla Bank Ltd.) includes: Background, Organizational
Profile, The Mission Statement, Strategies of the Bank, Goals of the Bank, Business
Objectives of the Bank, Products and Services, Position of Dutch Bangla Bank Ltd. in
the Banking Sector and Corporate Social Responsibility of Dutch-Bangla Bank Ltd
3rd chapter (Banking System at DBBL, Elephant road Branch) includes: Profile and
Departments of DBBL.
4th chapter (Different Aspects of Online Banking) includes: Definition of Online Banking,
Products and Services of Worldwide Online Banking, Features of online banking, History
chapter
(Findings,
Recommendations,
Conclusion)
includes:
Findings,
Table of Contents
No.
Topics
Letter of Transmittal
Page
I
Ii
Certificate of Supervisor
Iii
Certificate of Internship
Iv
Declaration of student
Acknowledgement
Vi
Executive Summary
Vii
Chapter-1: Introduction
1.1)
1.2)
01
1.3)
1.4)
1.5)
01
01
1.6)
1.7)
03
Background
Organizational Profile
The Mission Statement
Vision
Core Objective
Strategies of the Bank
Goals of the Bank
Business Objectives of the Bank
Products and Services
Products of the Bank
Services Offered by DBBL
Position of Dutch-Bangla Bank Ltd. in the Banking Sector
Corporate Social Responsibility of Dutch-Bangla Bank Ltd
Chapter-3: Banking System at DBBL, Elephant road Branch
04
04
06
06
07
07
07
08
09
09
10
11
14
3.1)
3.2)
3.2.1)
3.2.2)
Profile
Departments of DBBL
Customer Service Section
Card Section
15
15
15
15
3.2.3)
3.2.3.1)
3.2.3.2)
3.2.4)
3.2.5)
3.2.6)
3.2.7)
3.2.8)
4.1)
4.2)
4.3)
4.4)
4.4.1)
4.4.2)
4.5)
4.6)
4.7)
4.8)
4.9)
4.10)
5.1)
5.2)
5.2.1)
5.2.2)
5.2.2.1)
5.2.2.2)
5.2.2.3)
5.2.2.4)
5.3)
5.4)
5.5)
5.6)
5.7)
5.7)
5.8)
16
16
16
16
17
18
18
19
20
21
21
22
22
24
25
27
29
29
30
31
33
34
34
35
36
37
37
38
38
40
41
42
43
49
52
54
Recommendation
Conclusion
55
56
Chapter 1
INTRODUCTION
1.1
1.2
1.3
1.4
1.5
1.6
1.7
BBA program. Our BBA program is a complete blend of theoretical and practical
knowledge which help us to define and develop our career.
Presenting a brief view of the Bank and its operations from the viewpoint of a
neutral onlooker.
1.4) Methodology:
Any data can be classified as primary or secondary based on its available sources.
Primary data is a term for data collected on source which has not been subjected
to processing or any other manipulation. Secondary data is data collected by
someone other than the user. Common sources of secondary data for social
science include censuses, surveys, organizational records and data collected
through qualitative methodologies or qualitative research. Secondary data can be
obtained from two different research strands:
Quantitative: Census, housing, social security as well as electoral statistics
and other related databases.
Qualitative: Semi-structured and structured interviews focus groups
transcripts, field notes, observation records and other personal, researchrelated documents.
The data for this study was gathered from both the sources. Primary data is gathered
thorough observation and learning experience.
Secondary data sources involve the extensive use of financial statements and website of
DBBL to accomplish the aforesaid research objectives. The annual data for the selected
bank from the year 2004 to 2012 are used make the report informative. Other secondary
sources are: relevant books, magazines, journals, newspapers, and websites.
SWOT analysis of the bank has been done to judge the strengths and weaknesses
of the bank.
The whole processing of the report required a systematic approach. The flow chart below
shows the overall methodology followed:
Collection of Data
Bank Ltd A case study on Elephant Road Branch. It includes Account Opening,
Account Closing, Remittance, Payment Order Issue, Demand Draft Issue/Collection, and
also includes Accounts department which departments covers Cash, Transfer and
Clearing section.
Chapter 2
Overview of Dutch-Bangla Bank Ltd.
2.1) Background:
2.2) Organizational Profile:
2.3) The Mission Statement:
2.3.1) Vision:
2.3.2) Core Objective:
2.4) Strategies of the Bank:
2.5) Goals of the Bank:
2.6) Business Objectives of the Bank:
2.7) Products and services:
2.7.1) Products of the Bank:
2.7.2) Services Offered by DBBL:
2.8) Position of Dutch-Bangla Bank Ltd. in the Banking Sector:
2.9) Corporate Social Responsibility of Dutch-Bangla Bank Ltd:
2.1) Background:
Dutch-Bangla Bank Limited (DBBL hereafter) claims itself to be the most innovative and
technologically advanced bank of Bangladesh. Indeed, DBBL stands to give the most
innovative and affordable banking products to its customers. Having passed almost 17
successful years of leading banking service it even stands as one of the largest private
donors involved in improving the country and its people. DBBL is proud to be associated
with helping the people of Bangladesh by its social welfare activities along with the
banking services. The banking products and services it offers have both uniqueness and
affordability. Being the largest bank in respect of Automated Teller Machines (ATM
hereafter) booths and Point of Sales (POS hereafter) Dutch Bangla Bank has acquired a
distinguished position in the country as a preacher and pioneer of mass banking.
DBBL aims to provide its customers the latest banking technology and delivery channels
to provide seamless banking facilities to its valued customers through continuous
development of its technology. It gives high emphasis for the safeguard against any
disaster situation in order to continue the operation, where it has two servers one as
main server and other as backup server. The backup server is being updated every second.
The Bank has the largest ATM network in the country comprising of 2,366 ATM units,
4,612 POS units and 235 units of Fast Track on 31st December, 2012.
From the onset, the focus of the bank has been financing high-growth manufacturing
industries in Bangladesh. The rationale being that the manufacturing sector exports
Bangladeshi products worldwide. Thereby financing and concentrating on this sector
allows Bangladesh to achieve the desired growth. In addition to its banking activities,
Dutch-Bangla Bank Limited takes part in different national activities promoting sports,
culture, social awareness, etc. Participation in these activities as sponsors is part of its
business development policy. DBBL's other focus is Corporate Social Responsibility
(CSR). Even though CSR is now a cliche, DBBL is the pioneer in this sector and termed
the contribution simply as 'social responsibility'. Due to its investment in this sector,
DBBL has become one of the largest donors and the largest bank donor in Bangladesh.
The bank has won numerous international awards because of its unique approach as a
socially conscious bank.
2.3.1) Vision: Vision defines a desired future and helps guide all who accept
and understand it. Dutch-Bangla Bank dreams of better Bangladesh, where arts and
letters, sports and athletics, music and entertainment, science and education, health and
hygiene, clean and pollution free environment and above all a society based on morality
and ethics make all our lives worth living. DBBL's essence and ethos rest on a cosmos of
creativity and the marvel-magic of a charmed life that abounds with spirit of life and
adventures that contributes towards human development.
Search for a total customized solution of I.T. for the purpose of full
automation step by step.
Capital plan.
booths humming around the corners of the cities like Dhaka and Chittagong at different
points. Almost 50 booths have deposit facility. One can use ATM booths a maximum of 5
times a day with the lowest withdrawal of BDT. 500.00 and the highest withdrawal of
BDT. 50,000.00 a day.
The bank gives the option of using internet banking and SMS alerts for the customers.
They can always enable the options by just filling the Customer Options Form and
anytime can disable it also. Enabling the internet banking and/ or the alert banking will
cost the customers a minimum cost per year which is obviously affordable.
the level of non-performing loans in portfolio, its business and financial strength may be
adversely impacted. The deposit mobilization of Dutch-Bangla Bank Limited reported
24.5% increase in 2012 after a slow growth in 20011 (1.25%) and stood at BDT
125,433.1 million which was BDT 100,711.0 million in 20011. DBBL has deep customer
base gained through its large network (126 branches and 2,366 ATMs, as on 20012)
which provides the Bank relatively stable deposit base. The less dependency on borrowed
fund with declining trend (five-year period ended average was 2% of total funding) and
more concentration on deposit mobilization indicates the future stability of the Bank.
From the analysis of asset-liability management and maturity profile of deposit and call
market operations it was found that the sound liquidity management system of DBBL
would help the Bank to resist immediate liquidity shock. Net interest income dominated
the revenue stream with a rate less than 50% over the last eight years except 2005
(52.21%) resulting an average rate of 48.17% during the above mentioned period
revealing stable and good quality earning of the Bank. DBBL reported operating income
of BDT 11,293.6 million in 2012, which was BDT 9,090.5 million in 2011 registering a
growth of 24.2%. DBBLs operating expenses as a percent of total assets (avg.) were
slightly high compared to that of most of the private commercial banks including its peer
group over the observed period. The increasing trend of cost could be primarily attributed
to its business expansion, establishment of new distribution channels including largest
ATM network which will eventually raise the Banks smooth earnings flow in the
upcoming year.
DBBL strives to provide the latest banking technology and delivery channels to provide
seamless banking facilities to its valued customers through continuous development of its
technology. The Bank gives high emphasis for the safeguard against any disaster situation
in order to continue the operation, where it has two servers one as main Server and
other as backup server. The Bank stills the largest ATM network in the country
comprising of 2,366 ATM units and 4,612 units of POS terminals 235 Fast Tract (by end
of year, 2012). The Bank has formed a separate ICC Division segregated into Audit &
Inspection unit, monitoring unit and Compliance unit, though the ICC function was found
to be constrained with manpower shortage.
In 2012, the bank was given B rating in the CAMELS rating by the regulatory agency.
The rating indicates satisfactory performance, but many of its competitors were given A
rating that indicates strong performance.
Chapter 3
Banking system at DBBL, Elephant Road Branch
3.1) Profile
3.2) Departments of DBBL
3.2.1) Customer Service Section
3.2.2) Card Section
3.2.3) Clearing and Collection Section
3.2.3.1) Clearing Section
3.2.3.2) Collection Section
3.2.4) Retail Section
3.2.5) Cash Section
3.2.6) Remittance Section
3.2.7) Dispatch Section
3.2.8) Personal and Establishment Section
3.1) Profile:
DBBL Elephant Road Branch is a Non-AD branch by nature. The term AD describes Authorized
Dealers i.e. banks that have the authority to deal in and with foreign currency. The branch is not a
dealer of foreign currencies and hence it performs activities related to retail banking and general
banking services and the common ancillary services. The divisions of the branch are given below:
3.2.2) Card Section: This section deals with issuance of pin numbers for the
debit cards, forwarding of credit cards and solving different complaints and queries of the
customers. It also deals with issues like lost/stolen cards or capture cards. Debit card
service is the specialty of Dutch-Bangla Bank LTD. It offers different types of debit card
services such as DBBL-NEXUS (regular) card, DBBL-NEXUS Maestro card, DBBLNEXUS VISA Electron card, DBBL-NEXUS Silver OD card & DBBL-NEXUS Gold
OD card.
3.2.3) Clearing and Collection Section: This section deals with the
collection and payment of instruments like pay order, cheque, warrant etc. i.e. the noncash instruments. It settles all the inward and outward bill collection and payment
procedures.
3.2.4) Retail Section: This section deals with loans and advances related
activities. Advances are deposits which are made with the bank for a fixed period
specified in advance. The banks do not maintain cash reserves against these deposits and
therefore the bank offers higher rates of interest on such deposits. These deposits
generally constitute 50% or more of the total deposits. Usually customers are allowed to
open this account for a certain period. The rate of interest varies in accordance with the
terms of the deposit.
The retail division also gives lone to the customer. Demand loan, Letter of Credit, Import
loan Home loan, Health loan, Festival lone, Car lone, Education loan etc are given to the
customer. While applying for loan customers would need to carry supporting documents
like trade license, articles of association and memorandum, total investment details,
product details, sales and marketing plan (details of main buyers), details of imported
items and main suppliers, CIB undertaking of all directors, management details, bank
account statement for the past one year, details of master LCs & BB LCs for the past one
year etc.
3.2.5) Cash Section: There are five counters that work simultaneously in cash
section of DBBL, Elephant Road Branch. Electronic counting machines are used so that
huge amount of cash can be counted in minutes. This branch also allows evening hour
transaction only in case of deposit of money.
The work of cash receiving counter is examining and receiving deposit slips placed with
cash. Depositor will use the prescribed deposit slip supplied by the bank to deposit cash.
After checking all the necessary details like whether the title of the account and account
number is given or not, the amount in figure and in words is same or not, whether the slip
is signed by the depositor and the date is written, the teller will accept cash against its
deposit slip. He/she would, then, place the cash in the cash drawer according to
denominations. The teller will place sign and affix cash received rubber stamp and
return the customers copy to the customer.
In case of cash withdrawal, if the cheque placed has no defect and it is payable, the
officer in charge signs the cheque affixing signature verification seal along with his/her
initial and cancels the cheque by striking it with pen. The cash officer/s would then hand
over the payment to the appropriate payee.
Demand drafts
Pay order
Pay slip
Mail transfer
Telegraphic transfer
Dispatch of Letter
Dispatch of Telegram
For convenience of work despatch of letter has been classified into two groups mainly:
Inward Mail
Outward Mail
Each branch will maintain a deposit account with the local telegram office to which the
amount of initial deposit will be paid by debiting to the Charge Account under advice to
accounts division where a record of all such deposit paid by branches are maintained. The
receipt for the deposit will be recorded in the branch document register and retained with
other documents
Maintenance of stores
Chapter 4
Different Aspects of online Banking
4.1) Definition of Online Banking
4.2) Products and Services of Worldwide Online banking
4.3) Features of online banking
4.4) History of Online Banking
4.4.1) World wide
4.4.2) In Bangladesh
4.5) Facilities of Online Banking
4.6) Threats to Online Banking
4.7) Types of Online Attacks
4.8) Countermeasures
4.9) Ensuring Security in Online Banking System
4.10) Online Banking vs. Traditional Banking
Online banking is available twenty four hours, seven days a week, regardless of the
banks working hours. Today, most banks offer online banking services.
In Bangladesh, the definition took a bit narrower form. DBBL describes online banking
as the free flow of deposit and withdrawal of cash and non-cash instruments at DBBL
branches all over the country. In foreign countries where fund transfers within the
branches of any bank or inter-bank transactions are allowed, Bangladesh is a long way
back to that system.
Cash management.
Wire transfer.
Balance inquiry.
Funds transfer.
Loan applications.
Investment activity.
Online banking solutions have many features and capabilities in common, but
traditionally also have some that are application specific. But the common features fall
broadly into several categories that are stated here under:
Transactional (e.g., performing a financial transaction such as an account to
account transfer, paying a bill, wire transfer and applications, apply for a loan,
new account, etc.)
o Electronic bill presentment and payment EBPP
o Funds transfer between a customer's own checking and savings accounts,
or to another customer's account
o Investment purchase or sale
o Loan applications and transactions, such as repayments
Non-transactional (e.g., online statements, check links, co-browsing, chat)
o Bank statements
o Financial Institution Administration
o Support of multiple users having varying levels of authority
o Transaction approval process
o Wire transfer
Features commonly unique to Internet banking include: personal financial management
support, such as importing data into personal accounting software. Some online banking
platforms support account aggregation to allow the customers to monitor all of their
accounts in one place whether they are with their main bank or with other institutions.
4.4.1) World wide: The precursor for the modern home online banking
services were the distance banking services over electronic media from the early '80s.
The term online became popular in the late '80s and referred to the use of a terminal,
keyboard and TV (or monitor) to access the banking system using a phone line. Home
banking can also refer to the use of a numeric keypad to send tones down a phone line
with instructions to the bank. Online services started in New York in 1981 when four of
the citys major banks (Citibank, Chase Manhattan, Chemical and Manufacturers
Hanover) offered home banking services using the videotex (see appendix) system.
Because of the commercial failure of videotex, these banking services never became
popular except in France where the use of videotex (see appendix). Minitel (see
appendix) was subsidized by the telecom provider and the United Kingdom (UK
hereafter), where the Prestel system was used.
The UKs first home online banking services were set up by the Nottingham Building
Society (NBS) in 1983. The system used was based on the UK's Prestel (see appendix)
system and used a computer, such as the BBC Micro, or keyboard (Tandata Td1400)
connected to the telephone system and television set. The system (known as 'Homelink')
allowed on-line viewing of statements, bank transfers and bill payments. In order to make
bank transfers and bill payments, a written instruction giving details of the intended
recipient had to be sent to the NBS who set the details up on the Homelink system.
Typical recipients were gas, electricity and telephone companies and accounts with other
banks. Details of payments to be made were input into the NBS system by the account
holder via Prestel. A cheque was then sent by NBS to the payee and an advice giving
details of the payment was sent to the account holder. BACS was later used to transfer the
payment directly.
Stanford Federal Credit Union was the first financial institution to offer online internet
banking services to all of its members in Oct, 1994. According to internet world bank,
worlds top internet banks are:
Net Bank
ING Direct
Juniper Bank
Virtual Bank
First-E
Griffon Bank
Nexity Bank
E Trade Bank
Umbrellabank.com
DirectBanking.com
Deep green
American Express
Am Trust Direct
4.4.2) In Bangladesh: Dutch Bangla Bank Ltd. is probably, the pioneer of what
is called online banking today, in Bangladesh. It is the first bank in Bangladesh to be fully
automated and introduce Electronic Banking that has become online banking today. The
automation was completed in 2003, but further additions and features are continuously
being added and upgraded. May other banks are using online banking now, but they are
following partial online system. Among the PCBs, DBBL is probably the only bank to
use fully automation known as core banking. The foreign commercial banks, off course,
offer online banking. But the prevailing system in Bangladesh is partial online by nature
due to some restrictions imposed by Bangladesh Bank. According to the news published
in The Daily Prothom-Alo 0f 3rd November, 2009, Bangladesh Bank has allowed the
banks to conduct online transfers of funds within any account maintained with that bank.
For allowing this to happen, inter-branch transfer of money is possible now; and
Bangladesh Bank going to start inter-bank transfers in the near future. For this purpose, a
central gateway is being formulated. This step is a milestone for the journey of
Bangladeshi banks towards full automation.
Still almost all private commercial banks and some nationalized commercial banks are
trying to follow the Bangladeshi form of online banking. The local banks that offer online
banking are listed below:
Bangladesh Bank
Citibank N.A.
HSBC Bangladesh
Janata Bank
Profitability:
An online banking website can significantly reduce the cost related to customer
service and ancillary services, which can strongly improve the bottom line of an
organization.
With the help of online products, customers could be attracted as they make the
transactions easy to reach and reduces the necessity of face to face banking. Thus
increased customers naturally indicate better growth of the organization and
growth indicates larger market share.
In online banking, a prospective customer can take a look at all the products and
services offered by the bank or banks whenever s/he wants. Even s/he can
compare between the services, promotional offers, products and their service
charges applicable of different banks to take a better decision. It gives flexibility
and security, reduces information gap, enables comparability, eases transactions
and obviously minimizes loss of time.
Cost Efficiencies:
Banks can deliver banking services on the internet at transaction costs far lower
than traditional brick-and-mortar branches. The actual costs to execute a
transaction will vary depending on the delivery channel used. For example,
according to Booz, Allen & Hamilton, as of mid- 1999, in USA, the cost to
deliver manual transactions at a branch was typically more than a dollar, ATM
and call center transactions cost about 25 cents, and Internet transactions cost
about a penny. These costs are expected to continue to decline even in a country
like Bangladesh.
Branding:
Overseas transactions:
Online banking enables its customers to overcome the barrier of place and time.
Any time a customer can access the website and pursue his/her needs from
anywhere in the world through the use of internet.
Through online banking system, a customer doesnt have to stand in the queue
and wait for his/her turn. Using 24 hour internet helplines a customer can make
any query about the bank or its products and services or place complaints. These
options give the customer satisfaction and improve the overall quality of
customer service by reducing the customer load at banks.
Online transactions like fund transfer offers the customer security and safety. Now
they do not need to carry huge amount of cash and give it to their parties. Just one
click and the money are transferred to the partys bank account. This ensures
secured transactions and reduces risks.
The facilities of online banking are thus multifarious. Due to those facilities the system is
getting increased popularities all over the world.
the used software in a way, that correct transactions are shown on the screen and faked
transactions are signed in the background.
A recent FDIC Technology Incident Report, compiled from suspicious activity reports
banks file quarterly, lists 536 cases of computer intrusion, with an average loss per
incident of $30,000. That adds up to a nearly $16-million loss in the second quarter of
2007. Computer intrusions increased by 150 percent between the first quarter of 2007 and
the second. In 80 percent of the cases, the source of the intrusion is unknown but it
occurred during online banking, the report states. The most recent kind of attack is the socalled Man in the Browser attack, where trojan horses permit a remote attacker to modify
the destination account number and also the amount.
Trojan horse - A programmer can embed code into a system that will allow the
programmer or another person unauthorized entrance into the system or
network.
4.8) Countermeasures:
There exist several countermeasures which try to avoid attacks. Digital certificates are
used against phishing and pharming, the use of class-3 card readers is a measure to avoid
manipulation of transactions by the software in signature based online banking variants.
To protect their systems against Trojan horses, users should use virus scanners and be
careful with downloaded software or e-mail attachments. To minimize the risk of fraud,
online banking is enabled through a secure server, which grants the individual a private
access to his or her bank account.
Banks, meanwhile, should look into additional fraud detection capabilities. There are
many software firms that are working and are able to work specifically for financial
institutions to help them protect and improve their website. Banks may also go for
custom-built
software
it might even be wise to revisit such ideas as single-site browsers, in which the user can
only login to his or her bank through a web browser that sits as an application on the
desktop. By using the single-site browsers, one can navigate all he/she wants in one
particular site, say Dutch Bangla Bank Ltd. i.e. www.dbbl.com.bd but the person won't be
able to get anywhere else.
Of course, it all goes back to end-user awareness. The customers should be aware of the
risk of opening unknown or spam e-mail and the risks associated with those. Unless they
are aware and the bank officials are keen to improve, problems would exist and frauds
would happen.
Point of Distinction
Online Banking
Non-Online Banking
Supports
Doesnt support
Supports
Doesnt support
Supports
Doesnt support
Supports
Doesnt support
Online query
Supports
Doesnt support
Duration in clearing
Less
More
Supports
Doesnt support
Uses
Doesnt use
server
accounts online.
Banking
instruments
Deposit and withdrawal of
instrument at any branch
Chapter 5
Online Banking of Dutch-Bangla Bank
5.1) Online Banking at DBBL
5.2) Components of Online Banking System of DBBL
5.2.1) Any Branch Banking
5.2.2) Delivery Channels
5.2.2.1) ATM Booths
5.2.2.2) POS terminals
team went through eight weeks of extensive training on the project implementation
issues. In February 2004, the User Acceptance Test (UAT) started in the data center of the
bank. The core team and networking team started installation of the servers, networking
equipment and software, customization of the same to cope with the prevailing banking
rules and regulations of the country. Simultaneously, the switching team started
installation of ATMs and POS terminals and testing their performance with the switching
software.
After completing the UAT, the roll out of the branches from older system to the newly
installed automation process began. The IT division rolled out one branch at every
weekend and installed ATM under the respective branches. Every DBBL branch
supervises the activities of the ATM booths nearby them. The implementation process
started on July 2004 and on 18 th December 2004, the roll out of all branches of the bank
was completed. The year-end operation of the bank for the year 2004 was completed
successfully on 30th December 2004, centrally at data center. DBBL alone installed the
entire automation and DRS and the bank is still maintaining it alone. The software has
experienced some modifications as and when needed during these six glorious years. Still
it is a complete solution for online banking and is designed to support the mainstream
online banking followed across the globe. In Bangladesh, DBBL, Eastern Bank Ltd. and
Dhaka Bank Ltd. also uses Flex cube.
The software alone deals with all the activities of the bank. It has the following four
divisions:
Retail Banking
Corporate Banking
Investment Services
IT Related Services
It keeps records of newly opened accounts, it deals with recording cash and non-cash
transactions, and even it automatically debits the customer account if service charges are
applicable. All the ancillary services also performed by the bank with the help of this
software.
Being a non-AD branch, DBBL Elephant Road Branch mostly uses DBMS, Retail
Banking and Investment Services portion of the Flex cube software. For clearing related
works, it uses a MS-DOS file named nikash.exe prescribed by Bangladesh Bank. This is
the default software given to all the banks for posting and maintaining clearing related
activities.
Delivery Channels
5.2.1) Any Branch Banking: The term any branch banking describes inter branch transactions of DBBL. The bank offers the deposit and withdrawal of cash
and other instruments in any of its branches in Bangladesh. The customers can
transact in any of its branches nearby his/her place after opening account in any of
the branches. The deposit and withdrawal of would take effect in no time.
The customer can also opt for starting his/her internet banking or SMS alert
banking in any of the branches by only filling up the Customer Options form.
But he/she has to collect his/her password from the concerning bank where his/her
account belong to.
Also a customer can avail the following facilities through any branch banking:
Checking his/her account balance
Ask for transaction statements
Ask for solvency or any other certificates
Can pay utility bills
5.2.2) Delivery Channels: The second component of the bank is its delivery
channels through which it gives the online banking services. The bank has several
delivery channels that are listed below:
ATM booths
POS terminals
Internet banking
SMS & alert banking
Cash withdrawal
Balance enquiry
Taking a mini statement of hiss/her past ten transactions
Fund transfers (within his/her accounts)
Utility bill payment
All the booths are going to have deposit facilities soon, probably by next
January. Already fifty booths offers cash deposit facility. The bank also
has six mobile ATM booths that have no fixed location. These booths very
helpful while any exhibition or fair takes place.
The bank extended its ATM services to the customers of other banks by
signing the agreement with the following banks:
-
For ATM access to other banking institutions, the cost per transaction is
around BDT 70.00 (which is USD 1.00 & USD 1.25 if routed through
Visa and MasterCard network respectively). But DBBL charges only BDT
10.00 per transaction to the partner banks to help the consumers. Many
other banks are in the pipe line to make such mutual arrangements with
DBBL.
Logout
Funds transfer
Account Summary: The Customer will be able to view the list of Current,
Saving, Term Deposit and Loan accounts with the current balance.
Account Details: The Customer can choose a particular account and see the
account details including unclear fund, limit, interest accrued etc.
Account Activity: The customer can see or print his transaction activity in a
given account for a particular period.
Transfer Funds: The customer can transfer funds from one of his accounts to
another of his accounts within the bank.
Third Party Transfer*: The customer can transfer funds from one of his
accounts to another customers account within the bank.
Pay Bills: The customer can pay his utility bill (like Electricity, WASA, GAS,
Telephone, Mobile, ISP etc.)
Loan Repayments: The customer can make payment of the loan installment from
his CASA (Current Account Savings Account) account.
Statement Request: The customer can make a request for account statement for a
required period. The bank will manually service this request.
Cheque Book Request: The customer can make a request for a Cheque book. But
s/he has to collect it from the branch where the account was opened.
Cheque Status Inquiry: The customer can choose an account and enter the
Cheque number for which the status should be viewed.
Stop Payment Cheque: The customer can mark his Cheque leaf as stop payment.
Interest Rate Inquiry: The customer can query on the interest rates on CASA &
Term Deposit Products.
Foreign Exchange Rate Inquiry: The customer can query on the Foreign
Exchange (FX) Rates using this function.
Refill Pre-Paid Card: The customer can buy a refill number for his pre-paid
mobile phone or ISP link.
Change Password: The customer can change his Internet Banking Password
using this function.
Informational
Communicative
Transactional
server. The risk is relatively low, as informational systems typically have no path between
the server and the banks internal network. This level of Internet banking can be provided
by the bank or outsourced. While the risk to a bank is relatively low, the server or web
site may be vulnerable to alteration. Appropriate controls therefore must be in place to
prevent unauthorized alterations to the banks server or web site.
Communicative:
This type of Internet banking system allows some interaction between the banks systems
and the customer. The interaction may be limited to electronic mail, account inquiry, loan
applications, or static file updates (name and address changes). Because these servers
may have a path to the banks internal networks, the risk is higher with this configuration
than with informational systems. Appropriate controls need to be in place to prevent,
monitor, and alert management of any unauthorized attempt to access the banks internal
networks and computer systems. Virus controls also become much more critical in this
environment.
Transactional:
This level of Internet banking allows customers to execute transactions. Since a path
typically exists between the server and the banks or outsourcers internal network, this is
the highest risk architecture and must have the strongest controls. Customer transactions
can include accessing accounts, paying bills, transferring funds, etc.
From observation, it can be said that DBBL is offering the transactional type of online
banking service, almost. Third party fund transfers were restricted till now by Bangladesh
bank, but a through a recent circular Bangladesh bank has opened the gate for third party
transfer of funds through internet. This has made the online system of DBBL to perform
inter-branch transactions also. But any bank transactions through internet are still
restricted, though Bangladesh Bank is expected to allow it soon.
disaster, but this is a comparatively low risk as DBBL has a backup server that is
being updated continuously every second.
Cyber hacking:
Increased use of internet technology in banking may invite hackers. They always
target loopholes and websites of banks are their prime target. If the website isnt
secured enough or if the hacker is too strong then hacking may cause serious
problems for the bank. Also if anyone gets to know a third party password and
user ID then any misuse would cost the bank a lot.
actually make this easier because back up capabilities can be spread over a wide
geographic area. For example, if the main server is inoperable, the network could
automatically reroute traffic to a backup server in a different geographical
location. Security issues should be considered when the institution develops its
contingency and business resumption plans. In such situations, security and
internal controls at the back-up location should be as sophisticated as those at the
primary processing site. High levels of system availability will be a key
expectation of customers and will likely differentiate success levels among
financial institutions on the Internet.
DBBL offers utility bill payment and thus needs a process to settle transactions
between the bank, its customers, and external parties. This type of processes
should be carefully monitored and relationship with the parties is to be properly
maintained. In addition to transaction risk, settlement failures could adversely
affect reputation, liquidity, and credit risk.
Compliance Risk: Compliance risk is the risk to earnings or capital arising
from violations of, or non-conformance with, laws, rules, regulations,
prescribed practices, or ethical standards. Compliance risk also arises in
situations where the laws or rules governing certain bank products or activities
of the banks clients may be ambiguous or untested. Compliance risk exposes
the institution to fines, civil money penalties, payment of damages, and the
voiding of contracts. Compliance risk can lead to a diminished reputation,
reduced franchise value, limited business opportunities, reduced expansion
potential, and lack of contract enforceability.
Maximum online banks in Bangladesh offer their customers to use other bank
delivery channels, mostly DBBL delivery channels like ATM and POS.
Accordingly, banks should make certain disclosures on online banking channels,
including Web sites, remain synchronized with other delivery channels to ensure
the delivery of a consistent and accurate message to customers. Moreover, it is
important for the bank itself to be familiar with the regulations that permit
from a product or service and what special risks and benefits they incur when
using the system. As such, marketing concepts need to be coordinated closely
with adequate disclosure statements. A bank should not market the banks
online banking system, even the overall banking system based on features or
attributes the system does not have. The marketing program must present the
product fairly and accurately.
The bank should carefully consider how connections to third parties are presented
on their Web sites. Hypertext links are often used to enable a customer to link to a
third party. Such links may reflect an endorsement of the third partys products or
services in the eyes of the customer. It should be clear to the customer when they
have left the banks Web site so that there is no confusion about the provider of
the specific products and services offered or the security and privacy standards
that apply. Similarly, adequate disclosures must be made so that customers can
distinguish between insured and noninsured products. The bank needs to be sure
that their business continuity plans include the online banking business. Regular
testing of the business continuity plan, including communications strategies with
the press and public, will help the bank ensure it can respond effectively and
promptly to any adverse customer or media reactions.
AB Bank Ltd.
The survey was done based on a question answer basis. The findings of the survey are
described below:
DBBL
BRA C
EBL
HSBC
OTHERS
Mostly because of DBBLs agreement with many other banks, those banks could
offer debit cards and thus ATM service to their customers.
Internet banking:
This service is an optional one and user has to apply separately to enable this
option. Seventy percent of the selected banks answered Yes and twenty percent
answered No to the following question:
Does the customer can check their account maintained with your bank online?
While answering a question on the charge/s applicable for using online banking
facility, forty percent banks said there are no such charges, forty percent said a
fixed charge is applicable and twenty percent banks said the charges vary
depending on the nature of the customer. Only DBBL and SEB offer postpaid
mobile bill payment and recharging pre-paid mobile numbers using the banks
website.
SMS Alert banking:
In DBBL, SMS alert banking refers to the push-pull service between the bank and
any customer. Other than DBBL five banks were found to offer this service and
four banks dont have this service; i.e. sixty percent banks provide SMS banking
service; obviously optional; to their customers and forty percent banks dont. The
standard SMS charge/s is/are applicable and there is no fixed charge/s applicable.
DBBLs strength at the moment is its numerous ATM booths and POS centers.
Literally it holds more or less ninety percent share of the existing ATM and POS
market. For this reason the customers get attracted. Also the latest scheme of the
bank of opening savings account has done the magic. But in case of online
banking, ATM booths, POS centers, the new secured credit card with EMV (See
appendix) technology and the updated website are the internal factors that
contribute for DBBLs strength.
The weakness of the bank may be its mass banking strategy. The bank seems
overloaded with customers and that is affecting customer services and also its
activities. Many of the ATM booths are inactive or under maintenance. If this
problem persists, customers may switch to competitors.
The opportunity has come before DBBL to strengthen its current position by the
recent circular of Bangladesh Bank of allowing online fund transfer. This would
help the bank to capture a bigger market share than it occupies now. As the bank
already facilitates use of plastic money and has a built in structure of hundreds of
ATMs this opportunity of online fund transfer could give DBBL a well ahead
position in the industry and thus more profitability.
The major threats for any firm always involve threat from competitors. Till now,
DBBL is not really facing a tough competition. But banks like BRAC Bank Ltd.
and Eastern Bank Ltd. may become major threats for the bank in near future.
These two banks hold the second and third position in the industry for offering
ATM booths and POS centers. Though they are far behind, the bank needs to
become cautious to hold its number one position. Recently, it is being felt that
BRAC Bank is getting more customer satisfaction than DBBL in the field of
online banking. So this is the high time to take some specific steps that can
reduce the threat. Bangladesh Bank has allowed inter-branch fund transfer using
internet for all listed banks. If this opportunity is not properly utilized, other
competitors may beat the bank in the long run.
Findings:
The author of the report has the experience regarding the said topics for all about three
months at Dutch Bangla Bank Limited. Based on that experience, some noticeable
observations are described below:
DBBL has a bulk of qualified, experienced and dedicated human resources.
DBBL provide Internet Banking.
DBBL established so many ATM booths throughout the Country.
DBBL often has problem with ATM machine.
DBBL provides the modern technology and enters truly on On-Line Banking and
also provide ATM facility for the customer service .But most of the customers do not
know about Internet Banking and Different types of ATM cards. So DBBL should
focus and vastly advertise those kinds of facilities to the client.
Recommendations:
Though Dutch Bangla Bank has established its image as one of the best service provider
for its potential customers; still they are yet not the market leaders. The bank has to
overcome the shortcomings in the near future. Some recommendations are given below
based on the analysis of data:
Issuing of brochures and leaflets: Bank should issue or print more brochures
and leaflets with product details with a specific focus on online banking facilities.
Control over the mailing network: Dutch Bangla Bank should strictly
monitor the courier services that are engaged in delivering mails and documents. Huge
delivery failures are being piled up at branches. So, the bank should have control over its
couriers and ensure proper delivery of mails and documents.
Conclusion:
Dutch-Bangla Bank limited is a Bangladesh European joint Venture Commercial Bank
registered by the Bangladesh Bank. DBBL follows the rules and regulations prescribed
by the Bangladesh Bank for all scheduled commercial Banks. The functions of the bank
cover a wide range of banking activities. Dutch Bangla Bank limited truly follows all the
rules and regulations prescribed by the Bangladesh Bank for all scheduled commercial
Banks about Internet Banking. DBBL is delivering services like other banks. But if
services are offered at the augmented level definitely DBBL can become the market
leader. The study indicates that the growth of Internet banking services in Bangladesh is
positive enough to create attraction among the banks. The study also reveals that DBBL
has moderated level of satisfaction regarding the issue of online banking.
Appendix
Pharming and Phising : Phishing and pharming are two different ways hackers attempt to
manipulate users via the Internet. Phishing involves getting a user to enter personal
information via a fake website. Pharming involves modifying DNS entries, which causes
users to be directed to the wrong website when they visit a certain Web address.
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