Chapter 1
1.1 Introduction
Internet Banking is growing popular day by day in Bangladesh. A number of private as well as local banks are going online now considering the demand and necessity of fast banking. Internet banking not only provides banking facility round the clock but also helps a country to get attached to the international economy as well as business. People throughout the world are now getting engaged with more activity and business and hence need the fast and anytime access to his/her bank account. Internet banking also facilitates buying and selling various products which varies country to country.
In Bangladesh many banks have launched Internet Banking. Amongst those HSBC, City Bank, BRAC Bank, Bank Asia, Jamuna Bank, Janata Bank, Southeast Bank, AB Bank, First Security Bank, Mercantile Bank, Premier Bank etc are in action already. Some are known as online banking, some are Internet Banking, providing various facilities. Like City Bank has the facility of account check and statement print including query about cheque book information. Bank Asia has almost same facilities but with addition they have internal fund transfer facility along with bill payment and mobile phone recharge which are, in fact quite handy.
Mercantile bank has a schedule for internet banking. It is Sunday to Thursday, 9am-3pm. They have the facility of money transaction, deposit and withdrawal though they charge a particular amount for each transaction according to their policy, it is a relief if you don’t have to go to bank for depositing and drawing money, isn’t it?
HSBC and BRAC Bank are clearly not satisfied with the transaction thing only in internet banking. They thought of something more and desiring and customized the service to its best for their clients and getting better day by day. HSBC has a whole lot of features in their online banking that includes 24/7 account access, loan account information, net- worth information, transaction amongst accounts, bill pay, personal information update, demand draft, ATM info or PIN replacement request, chequebook order and lot more.
BRAC bank is one step ahead because for the first time they have introduced online shopping in Bangladesh. With exclusive features and facility BRAC bank also provides general online facility like the other banks. BRAC bank’s online shopping facilitates merchants to buy any product as they need online, they can customize the offers as well. Those who may have BRAC Bank VISA card or any VISA card can be a part of this online shopping service.
As the world economy is growing faster and banking sector is making mark each and every day, online banking is very important and effective to be a part of it. Bangladesh just started its journey in internet banking and banks are coming forward to make it a success. Online banking is clearly a huge benefit for the customers and saves a lot of time and things get done so easily. A developing country like Bangladesh can make the best out of Internet Banking and banks are completely into it.
1.2. OBJECTIVES OF THE STUDY
The following are the major objectives of this study:
(i) To shed light on the concept of internet banking.
(ii) To examine the present status of existing internet banking in Bangladesh.
(iii) To know the adoption of internet banking in Bangladesh context.
(iv) To identify various forms of internet banking in Bangladesh.
(v) To identify the future challenges posed by the internet banking in Bangladesh.
(vi) To give brief idea of internet banking.
1.3 Methodology of the Study
Both primary and secondary data collection methods are applied for this study purpose. I have collected data through check list, interview with the head of IT and from some published sources. This research is basically exploratory and descriptive in nature.
1.4 Limitations of the study
a) We have not focused on various modes of internet banking.
b) We have not made comparison with banking practice around the world.
c) We have not provided insight for security in internet banking system.
d) We have not focused on the critical issues on security in internet banking. Chapter 2
2. Conceptual issues

2.1 Online Banking
Banks are considering online banking as a powerful “value added” tool to attract and retain new customers while helping to eliminate costly paper handling and teller interactions in an increasingly competitive banking environment. Online banking (Internet banking) is a term used for performing transactions, payments etc. over the internet through a bank’s secure website. This is very useful especially outside banking hours. In most cases a web browser such as Internet explorer or Netscape Navigator is utilized and any normal internet connection is suitable. No special software or hardware is usually needed.

2.2 The History of Internet Banking

The idea of Internet Banking came with the rise of users of the internet and with the development of the World Wide Web. The programmers have been working on data bases of banking transactions long ago and an idea of online banking transactions had evolved at that time in the early 1980’s. New technologies and the advancement of computer devices created an opportunity to start a new trend of online shopping. Online Shopping or shopping from the website using the internet promoted the use of credit cards. To facilitate online shopping date ware housing or date storage facilities were used. During the development of the Automatic Teller Machines or ATMs the development of the databases of banking transactions were also used.
In the 1980’s the financial organizations and banking institutions mainly in Europe and the United States of America carried out researches and programming experiments on “Home Banking” . At that point of time Home Banking was carried out using the telephones and fax machines. This was done because the internet was not widely spread and many people were not aware of such facilities. The wide spread of the internet and the advancement of programming technologies created new opportunities for banks.
The first internet banking service was introduced in the United Kingdom by the Nottingham Building Society (NBS). The Internet Banking Facility that was introduced is believed to have been derived from a system which is known as “Pestle”. The internet banking facility introduced by the NBS was not very impressive and had drawbacks. The main drawback was it restricted the number of transactions and functions that account holders could execute.
In the year 1994 the first online banking service was introduced in the United States. A financial Institution named Stanford Federal Credit Union had developed this service of internet banking.
There are many negative sides of internet banking .These include a hacking, phishing , pharming, spoofing , sniffing and other unethical acts which makes internet banking facilities risky for both the users and the banks . Although Internet Banking has negative sides but we should also consider the positive sides. Internet Banking has created a revolution and it has a significant role to play in enhancing the banking sector.

2.3 The history of internet banking in Bangladesh

The Internet came late in Bangladesh, with UUCP e-mail beginning in 1993 and IP connectivity in 1996. By July 1997 there were an estimated 5,500 IP and UUCP accounts (Press, L., 1999) in the country and by the end of 2000 it has been forecasted that the account holder could reach more than 50,000 through different Internet Service Providers
(ISP), who are offering Internet services with bandwidth ranging between 65 Kbps and 2 Mbps through VSAT, Broadband.
In June 1996, the government decided to allow private entrepreneurs to act as ISPs using VSATs (Very Small Aperture Terminal). In 1999, there were about 22,000 account holders with 10 ISPs (8 in Dhaka and 2 in Chittagong) and the total number of users ranges around 100,000, while in 2000, there are about 50 ISPs providing Internet services to more than 250,000 Internet users. The growing demand of the society and the 10 congenial global atmospheres towards Internet has pressurized the entrepreneurs to rethink their policies and strategies to accommodate the newly emerged rapidly enlarging target group.
Initially there were only a few UUCP (Unix-to-Unix Copy Protocol) accounts in the country and then they were replaced by IP (Internet Protocol) accounts. At a later stage low bandwidth 64Kbps VSAT (Very Small Aperture Terminal) link became the main Internet backbone of the country with 120 million people. Demand did not inclined high compared to the huge population base, because most of them lives in rural areas where minimum tele-communication infrastructure is missing and at the same time purchasing power of the general communities limiting Internet connectivity with prevailing socioeconomic conditions.
Bangladesh Telegraph and Telephone Board (BTTB) has already established a network for high bandwidth Internet connectivity through offering commercial services. BTTB has established a fiber optics backbone throughout the country and also has a plan to offer ISDN (Integrated Services Digital Network) service using the facilities in Dhaka and Chittagong cities. They have opened X25 and X28 services in eight cities of the country and established Digital Data Network (DDN) at Dhaka and four other cities.
Through DDN they are going to offer IPLC (International Private Leased Line Circuits), National (Point to Point High Speed data Circuits), Local (Point to Point High Speed Data Circuits) and E1 Access from PSTN (Public Switched telephone Network) to ISPs.
2.4 Advantage and Disadvantage of Online Banking: Online banking can simply be defined as the process of entering into transactions by a particular client and the bank using modern technology. With the various capabilities of the computer and other technological developments, online banking is one of the many businesses that benefited from it. Since banking plays a very important role in the economy of a nation, then there is truly a need to maximize and improve its features to be client friendly and easy to access. There are of course the advantages and disadvantages of online banking.

Among the advantages of online banking include the following:-
• Very convenient. Online banking is a totally easy thing to do. In the comfort of your home or offices, you can do whatever monetary transactions you wish to do with your bank.
• Unlimited service day and night. The services and various features of your bank are always available seven days a week and 24 hours daily. The most interesting thing here is that, everything can happen at just one click of your mouse.
• No time constraint. Online banking is also stress free because it never closes unlike the traditional banking that has cut-off time.
• Easy to access via PC. Using your personal computer, you can easily do various transactions with your bank in view of your business or any other personal or financial matters.
• Easy way of payment. Bill payments can also be handled properly and smartly. Instead of waiting for certain due dates, you can easily pay all your transactions using your computer and in coordination with your bank.
• Smart. Online banking is also ubiquitous or simply put smart. This enables you to do troubleshooting regarding any problem that may arise from your business.
• Higher interest rate. Another great advantage of online banking is the interest rates which basically range between 5% to 3.40% annually. Unlike the traditional banking, online banking can earn you a better interest or return of investment both in your savings and checking account.
• Easy transaction. Another advantage is the speed of every transaction. Online transactions, compared to ATM or traditional banking, works faster. Thus business matters could benefit so much from this speed feature.
• Banking online is both efficient and effective. With just one secure site, all your financial transactions can be managed orderly.
On the other hand, the following are the disadvantages of online banking:-
• First is the slow processing from the moment you entered a financial transaction with your bank via the computer. Usually the bank will require you to submit certain documents like an identification card, signature and the like. Not only will the bank online require you to submit documents but also to provide special power of attorney in cases where you want to do transactions together with your spouse. A concrete example is when you want to manage all your wealth and resources together as a couple and you wish to view it online. Certain technical procedures regarding online banking may be taxing too and complicated.
• Another disadvantage is the so-called learning curve. This means, banking online especially in locating the sites may be complicated and hard to find.
• Another disadvantage is bank site changes. If this occurs, the bank will require you to re-enter all your information again and other related data.
• Finally is the trust aspect. Online banking should be entered very carefully if you wish to enjoy your financial life.

2.5 Internet Banking products and services
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.
2.6 Growth in Internet Banking
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. Some of the market factors that may drive a bank’s strategy towards internet banking include the following:
• Competition: The competitive pressure is the chief driving force behind increasing use of internet banking technology, ranking ahead of cost reduction and revenue enhancement. Banks see internet banking as a way to keep existing customers and attract new ones to the bank.
• Cost efficiencies: Banks can deliver banking services on the internet at transaction costs far lower than traditional ways. The actual costs to execute a transaction will vary depending on the delivery channel used. These costs are expected to continue to decline.
• Geographical Reach: Internet Banking allows expanded customer contact through increased geographical reach and lower cost of delivery channels. In fact some banks are doing business exclusively via the internet – they do not have traditional banking offices and only reach their customers online.
• Branding: Relationship building is a strategic priority for most banks. Internet banking technology and products can provide a means for banks to develop and maintain an ongoing relationship with their customers by offering easy access to a broad array of products and services. By capitalizing on brand identification and by providing a broad array of financial services, banks hope to build customer loyalty, and enhance repeat businesses.
• Customer Demographics: Internet banking allows banks to offer a wide array of options to their banking customers. Some customers will rely on traditional 5 branches to conduct their banking business. Other customers are early adopters of new technologies that arrive in the marketplace. The challenge to banks is to understand their customer base and find the right mix of delivery channels to deliver products and services profitably to their various market segments.
As use of the internet continues to expand, more banks are using the web to offer products and services or otherwise enhance communications with consumers. The internet offers the potential for safe, fast, and convenient new ways to shop for financial services and conduct banking business, any day, any time.
2.7 Computer Technology in Bangladesh
Though the first main frame computer came to Bangladesh in 1964, but the usage of PC became popularize very late to the common people. Several large banks and private entrepreneurs in industrial sectors are the path makers of achieving benefits from computer and computerized applications. Bureau of Statistics and a few nationalized banks are the leaders in using computer in government sector by processing data and information, while industrial concerns in private sectors are the leaders in applying computer for their accounting, payroll and inventory related applications.

Chapter 3
Data and SWOT analysis
3.1 Extent of Internet banking services
A clear idea about the availability of internet banking level (location wise) can be obtained from the graph below. Most of the internet banks are in the entry level out of the four levels defined as below:
• Entry: The bank is offering informational services only
• Basic: The bank is offering communicative services only
• Intermediate: The bank is offering some specific transactional services such as fund transfer, remittance etc.
• Advanced: The bank is offering all the transactional services a customer needs. Source: BAH Corporate Internet Banking Survey

Figure 1: Classification of Current Corporate Internet Banking Sites 3.2 Trends of Internet Banking
In the United States of America, in the recent years, there was a sharp rise in internet banking. The US customers are very much technology conscious. So the internet banking took away the market very quickly. Source: BAH Corporate Internet Banking Survey
Figure 2: The Trend of Internet Banking in USA

From Internet Banking Survey it is evident that the advanced and intermediate level internet banking service providers are increasing at a higher rate.

Source: BAH Analysis, BAH Corporate Internet Banking Survey

3.3 New ISPs are emerging
After the withdrawal of imposition on VSAT in April 2000 the Internet scenario of the country has been changed drastically. An entrepreneur has only need to obtain a simple permission from the government run BTTB with an annual mandatory fee of USD3500 and can choose any globally available transponder services. Breaking of this monopoly has increased competition in the market with rapid reduction of equipment cost and cost of satellite services, reflecting abrupt reduction of Internet usage fee. Legal framework now also permits ISPs to float public share in the stock exchange (Rahman, H., 2000). Current bandwidth of Internet backbone ranges between 64Kbps and 2Mbps through dedicated full-duplex VSAT links. There are a few companies, who are trying to make popularize their Broadband connectivity sharing an allocated bandwidth. Zacknet seemed to lost popularity because of its one way communication. There were a few ISPs who were using Zacknet for downloading during rush hours, but cost of the service has been restricting its popular use. Figure 4: Trend of the increment of the number of ISPs

Concentration of ISP is the most in Dhaka city, where more than 80% of them are located. Only three has been established in Sylhet, three in Chittagong and one each in Rajshahi, Khulna and Bogra. There are about 5 large ISPs and among them Grameen Communications has a customer base of more than 6000. Two of the ISPs are offering their Internet services through 2Mbps full-duplex VSAT link, while highest peak time Internet usage rate ranges from Taka 1.50 to lowest Taka 0.20 (2.00 to 6.00 am for one ISP).

3.4 Internet users are increasing
Today the people are getting more technology conscious. They are well aware of the benefits of the technology. This made many people a user of the internet facilities. The number of users increased fast over the years. Figure 5: Trend of Internet Users in Bangladesh

From the figure we can see that there is a sharp rise in the number of internet users. The number of internet users in Bangladesh has jumped by more than 150% in a year to over one million3, partly due to lower tariffs. This will form a strong background in favor of internet banking in Bangladesh.
3.5 SWOT Analysis
To find out the viability of a particular product we must perform a SWOT Analysis of the product. This will analyze the Strengths, Weaknesses, Opportunities, and Threats of the particular product. For analyzing the performance of Internet Banking in Bangladesh we the following SWOT Analysis is considered
Strength
• Internet Banking is new in our market. Only a few banks are now offering internet services in solving banking problems. Most of the banks are offering only accounting information online. Actual fund transfer and fund disbursement is not possible in all the banks that are offering internet services. So this product will enjoy the benefit of a first mover.
• It is cheap both for the banks and the customers. The bank will be able to lower down the overhead costs and make more profit out of it. Internet banking will require less manual workers. Again the customers will be able to save time as well as money for their transaction needs.
• Internet banking is convenient as the service is available all the time at just a click away.
Weaknesses
• Security breakdown: The system will have a problem with the identification of the individual who is initiating the transaction. In Bangladesh, the identification of an individual is not yet supported digitally. So there will be a problem in moving to the Internet era for banking purposes just now. First we will have to develop a digital database of the users of the internet banking services.
• The transaction can be cancelled only via internet. The internet infrastructure of our country is not that much supportive to provide all time access to the web. So there will be a problem in executing the service with its full functionality.
Opportunities
• Non-branch banking is becoming popular in our country. Many banks are now offering non-branch banking facilities. A person can withdraw or deposit money in any branch of the bank he has account with. So moving to internet banking will allow the banks to offer non-branch banking facilities.
• The internet services are becoming very common to us. So a service offered through the internet will be widely accepted in the near future.
Threats
• People have concern about security and privacy. They like to feel their money with their hand. They actually don’t believe in virtual money transfer.
• In the field of IT new technology is coming everyday. The one which is very popular today might get obsolete tomorrow. So to have a competitive edge over the competitors the banks must always update their services.
• The movement towards online banking might marginalized the customers who do not have internet access or who are not technologically sound. Despite the presence of online Internet service in Bangladesh, its scope is largely underutilized. The reasons include high service charges, lack of awareness, poor telecommunication systems, government policy, low buying power of potential clients, and lack of institutional support.

Chapter 4
4.1 Findings
A broad spectrum of electronic baking services, a subset of e-finance, is available in Bangladesh with various degree of penetration. Credit card and POS services are provided by 23 percent of banks [PCBs and FCBs]. Several thousands of POS terminals have been set in major cities of the country. Tele-banking is second most penetrated ebaking service in Bangladesh. ATM is expanding rapidly in major cities. A group of domestic and foreign banks operate shared ATM network, which drastically increase access to this type of electronic banking service. The network will gradually be extended to other parts of the country. Credit card is also becoming very popular service in major cities of Bangladesh; during 1999-2005 the growth of credit card market is more than 100 percent. The credit card service is available from VISA, MasterCard and VANIK. Some foreign banks provide electronic fund transfer services. Microchips embedded Smart Card is also becoming popular in the country, particularly for utility bill payment.
Table 1: Electronic Banking Services in Bangladesh (percentage of Banks)
Product 2000 2001 2002 2003 2004 2005
Tele Banking 20 24 25 28 30 32
Online Corporate Banking 8 12 14 15 18 25
Electronic Fund Transfer 15 18 20 22 25 30
ATM 15.4 28 28 30 35 40
Credit Card 23 - 20 25 28 24
David Card 3.8 18 22 28 33 40
Merchant Account Service 3.8 12 15 18 18 20
Internet Banking 7.7 12 15 22 35 45
Represents data unavailable
Last couple of years shows dramatic improvement in the awareness situation in the banking community regarding the comprehensive application of ICT. The experts forecast that ICT penetration in the banking sector will improve dramatically by 2005. Majority of banks is planning to introduce ICT for integration of banking services and new e-finance services, which will play a vital role in bringing efficiency in the financial sector. Among the banks surveyed 75 percent of banks have strategic plan to implement ICT and internet banking.
The foreign banks are the pioneers in adopting electronic finance 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 interbank linkage. Foreign banks through successful use of a global network, has increased the timeliness and accuracy of information, benefiting its customers, its employees and also its management.
Bangladesh Bank is now moving to the era of technological advancement. Bangladesh Bank is planning to have Automated Clearing House (ACH) which will automate the processing of checks by MICR coding. This shows the intention of Bangladesh Bank to the betterment of the services. This will eventually lead to internet banking to a requirement for all banks in the near future. With all the strategies we have set for us we can enter into a new world of internet banking.

4.2 The constraints on Internet Growth in Bangladesh
Though we have seen some sharp rise in the growth of internet and internet users, there are some impediments on the way to the growth of internet in Bangladesh. Some of the reasons4 are listed below:
• Underdeveloped IT industry
• Lack of efficient use of IT network
• No direct access to the information super highway
• Limited skilled human resources
• Poor telecommunication infrastructure
• Low-level of computer literacy
• Widespread poverty
• Low telephone penetration
• Lack of software in the Bengali language

4.3 Opportunities for a better Internet support
• Bangladesh has a nationwide fiber-optic network established by Bangladesh Railway. Hardly 8% of this fiber-optic capacity was ever used during the years of its existence. This facility can provide excellent backbone for nationwide voice and data communication.
• As we have no direct access to the information super highway the only option is to communicate through satellite. Satellite communication is costlier than fiber optic.
• To avoid satellite communication and its high cost, we can establish the missing link to the information super highway if the nation-wide fiber-optic network is allowed to link up with the high speed fiber-optic backbone in India.
• Availability of telephone lines and reduction in service fee will attract many professionals into internet arena.
• Young generation should play a vital role in developing IT industry in Bangladesh.

4.4 Cost Benefit Analysis
The main benefit of internet banking is the amount of time (thus money) it saves. Although Internet banking is restricted to managing accounts and making on-line transactions, it cuts out much of the need to personally visit the bank. Using Internet banking will also increase the efficiency of paying money (bills, debts, wages, etc) as it can reduce the need for writing and sending cheques (which can take up to 5 days to clear). Wages and Salary payments can be created via internet banking to pay such money, which is also an efficient way of paying staff wages. On-line banks are able to offer their customers higher interest rates than high street banks due to their reduced overheads. If the popularity of Internet banking takes off as predicted the banks may also be capable of offering their Internet banking customers higher interest rates (due to reduced overheads or as an incentive). Though Internet banking will require a higher initial investment, the operating expenses will be much lower. Again customers will be satisfied through fast, accurate, easy-to-use, comprehensive delivery of the services. So internet banking will be much more beneficial to banks as well as customers.

4.5 DRIVERS OF E-COMMERCE
The following broad themes have been identified as the driving forces for the phenomenal growth of E-commerce globally:
(i) Electronic Commerce is easy and affordable
(ii) Electronic Commerce transforms the market place
(iii) Electronic Commerce has a catalytic effect
(iv) Enhanced customer service
(v) Electronic commerce over the Internet vastly increases interactivity in the economy
(vi) Openness is the underlying technical and philosophical tenet of the expansion of Ecommerce
(vii) Electronic commerce alters the relative importance of time.

4.6 A Brief Idea about Internet Banking
Internet: The internet is the network of networks. It is a global system of interconnected computer networks that uses the standard internet protocol suite (Transmission Control Protocol/Internet Protocol) or (TCP/IP). The internet consists of billions of public, private, academic, business and government networks ranging from a local to a global scope. These networks are linked by a broad range of electronic, wireless and optical networking technologies.
The internet has become a necessity in every field. The importance of internet has reached to a new level as it carries inter-linked Hypertext documents of the World Wide Web and a wide range of important information resources and sources.
The internet not only has helped many professionals in their respective fields by disseminating and sharing information but has also reshaped the traditional communications of telephone, music, television etc. E-mail or electronic mail has helped business and individuals to communicate in a much cheaper way. Instant messaging has made communications much easier than e-mails. Users can exchange messages using their Personal Computers, laptops, PDA, Tabs , mobile phones etc in real time. The website technology has allowed users to read news , books or other information which is accessible via a network. A web page is a document usually written in plain text. However a web page is interspersed with formatting instructions of Hypertext Mark Up Language (HTML) or (XHTML). The pages of a website can be accessed from a simple Uniform Resource Locator called the web address.
The website Technology has allowed blogging and web feeds. Social Networking has increased human interactions more than ever before. The internet has also users who are located in distant places to talk via the VOIP or Voice over Internet Protocol. Millions of users of the internet talk or chat with each other using the internet technologies. The internet has helped doctors to carry out distant operation via teleconferencing or using instructions on a robot through the internet to carry out a operation surgery on a patient on the other side of the world.
E-COMMERCE and online shopping has enabled the formations of new business .Any one can trade using the website of an e-commerce website by sitting at home. Businesses of many types use the internet to reach their customers most effectively. Both (B2B) Business to Business transactions and (B2C) Business –To-Customer transactions are carried out using the internet. Financial Institutions also use the internet for various purposes for updated news, selling financial products to their clients and to provide financial Services. The increasing use of Internet by people has convinced banks to come up with the idea of internet banking or online banking.
Internet Banking: Internet Banking basically includes all types of banking activities performed through electronic networks. In recent times internet banking is used as a delivery channel of banking services to both Business-to-Business (B2B) and Business-To-Customer (B2C) transactions. Internet banking activities includes the payments of bills and invoices, transfer of funds from one account to another, application of a loan, payment of loan installments, sending funds to third parties. These activities are carried out via emails and internet based activities. Internet banking is an electronic connection between a particular bank and its customers. It can be used to prepare, manage and control financial transactions. Internet banking is simply a pathway of carrying out the transactions through the networks and not a banking product or a banking service.

4.7 Choice of authentication technology:
Match authentication technology to the risk profile of the business process usually the cost as well as security of password, one-time password, and handheld token and digital certificate is lower than the cost and security of smart card and biometrics.
21st century online applications:
(i) Access our bank accounts
(ii) Transfer money
(iii) Make investment
(iv) Pay Bills
(v) Apply for loans and mortgages
(vi) File tax returns
(vii) Purchase goods and services
(viii) Top-up mobile phones
(ix) Sign contracts
(x) Change addresses
(xi) Track parcels and shipments
(xii) Access governmental services
(xiii) Collect dividend
(xiv) Vote
(xv) Play online games
(xvi) Gamble
(xvii) Bet
(xviii) E-procurement
(xix) Receive Healthcare
(xx) Order medicines

Chapter 5
5.1 Recommendation
This paper is a descriptive study where the main purpose was to highlight the present status, future prospects and challenges of technology driven banking.
Now-a-days technology driven banking services are not 'nice to have' but an 'impossible to survive without' for all banks. It has changed the traditional banking system drastically and made banking service easy and accessible. But Bangladesh is a developing country with limited infrastructure facility and limited skilled manpower. Computer literacy of the people is very poor and information technology is in the infant state.
A well functioned tech based banking system is dependent on the availability of a backbone network connecting the whole country; reliable and secure information and telecommunication infrastructure; ICT penetration in the banking sector; skilled operational personnel; and legal and regulatory framework. Both individual and joint efforts are needed to overcome the constraints in promoting the technology driven banking in the country. The recommendations of this study are mentioned below.
5.2 Conclusion
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 products and services can include wholesale products for corporate customers as well as retail and fiduciary products for consumers. 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.

Though there are 28 banks in Bangladesh, mostly head quartered in Dhaka (7)., only a select few have web pages However, most of these banks do not offer online or electronic service such as Direct Deposit. There are some ATM machines, though not nearly as concentrated as in a developed economy.
Internet is a new product in Bangladesh. The extent of Internet is not that vast in our country. But one end of the financial market is technologically aware. They are the customers of internet banking. Most of the banks have their own websites but not all of them offer internet facilities. The main reason of this is that the banks do not have the IT infrastructure and proper security features.
The Ministry of Science, Information and Communication Technology has given out the policy for the development in the IT sector. The ministry has concentrated on the following sections:
• Human Resources Development through Education and Training
• ICT Infrastructure development
• Research and Development in ICT
• Development of ICT Industry
• Development of E-Commerce
• E-Government / E-Governance establishment
• Establishment of Legal Issues
The Government spending in ICT is going to increase by at least 2% of ADP in coming years. The new budget provision encouraged the investment in the application of ICT in trade and finance. The ICT companies will get preferential terms which will be able to meet up 20% of its revenue expenditure. BCC has created a centralized fund for R&D which would encourage to contribute 1% of all profits from ICT-enabled services to the HRD fund. This will greatly help the development if ICT in Bangladesh.
The software support for internet banking, i.e. FLEXCUBE is available in Bangladesh. Again Bangladesh Government is working on the copyright law and the preservation of intellectual property act. After the successful implementation of all these policies and strategies we are expecting that more than 50% of the banks will be offering internet banking facilities which is now 12% only.
Another important issue in extending the internet banking services throughout the country is gaining popularity. The sense of security is of great importance. In Bangladesh most of the people are illiterate and obviously they are technology ignorant. But among the literate portion many of them have computer phobia. So these people can’t trust on the internet banking services. To gain the confidence on internet banking the overall computer literacy must be developed. With that goal government has taken initiative even in the root level to develop it literacy in the country. This would be a perfect ground for the development of internet banking.
Bangladesh Bank is now moving ahead towards technological advancement. They are planning to have Automated Clearing House which will automate the cheque clearing process. This will eventually lead to internet banking a requirement for all banks in the near future. 5.3 Reference: 1. Huff, S. L. Schneberger, W. M. Newson, P. Parent, M., Case in Electronic Commerce, Boston: McGraw – Hill
2. Bank Collections and Payment Transactions
3. Internet data finding and analysis.
4. Report on Survey of IT Resources of Bangladesh and Identification of Y2K Problem Areas