E-Banking Communication System of Mercantile Bank Limited

Chapter 1

Introduction to the Report

Backdrop of the Bank      

Banking system occupies an important place in a nation’s economy. Banking institution is indispensable in a modern society and it plays a vital role in the economic development of a country. Against the background of liberalization of economic policies in Bangladesh, Mercantile bank Limited emerged as a new commercial bank to provide efficient banking services with a view to improving the socio-economic development of the country.

Mercantile Bank Limited is a scheduled private commercial bank established on May 20, 1999 under the Bank Company Act, 1991 and incorporated as a Public Limited Company under Company Act, 1994. The Bank started commercial banking operations from June 02, 1999. During this short span of time, the Bank has been successful to position itself as a progressive and dynamic financial institution in the country.

The Bank had been widely welcome by the business community, from small entrepreneurs for forward-looking business outlook and innovative financing solutions. Thus, within this very short period it has been able to create an image for itself and has earned significant reputation in the country’s banking sector as a bank with vision. The company Philosophy –“efficiency is our strength” has been exactly the essence of success of this Bank.

Mercantile Bank Limited has been licensed by the Government of Bangladesh as a scheduled Bank in the private sector in the process of the policy of liberalization of banking and financial services of Bangladesh. In view of the above, the Bank has, within a period of Ten years of its operation, achieved a remarkable success and has always met up capital adequacy requirement set by Bangladesh Bank.

There are twenty-seven Sponsors involved in creating Mercantile Bank Limited; the sponsors of the Bank have a long heritage of trade, commerce and industry. They are highly regarded for their entrepreneurial competence. The sponsors happen to be member of different professional groups among whom are also renowned banking professionals having vast range of banking knowledge. There are also members who are associated with other financial institution.

The board of directors consists of 21 members elected from the sponsor of the bank. And the board of directors is the apex body of e bank. All route matters beyond delegated owners of management are decided upon by or routed through the executive committee, subject to ratification by the board of directors.

At A Glance Of Mercantile Bank Limited

Management Hierarchy of Mercantile Bank Limited

The board of directors consists of eminent personalities from commerce and industry of the country.

Highly qualified and efficient professionals manage this bank. Board of Directors who also decides the composition of each committee determines the responsibilities of each committee. All routine matters beyond delegated powers of management are decided by or routed through the executive committee, subject to rectification by the board of directors.

 Objectives Of The Report

The major objectives are to measure and evaluate the performance of Mercantile Bank Limited based on E-banking, to get an overall idea about the online business and also to figure out the weakness in performance in E-banking and construct the ways of recovery.

 The specific objectives of the study are as follows:

 To present an over view of the communication system of E-banking of Mercantile Bank Limited.

 To gather comprehensive knowledge on E-banking function of Mercantile Bank Limited.

      To know how this organization plays its role in the online business.

      To know how the E-banking performed its activities

Scope of the Study

Mercantile Bank Limited is one of the new generation banks in Bangladesh. The scope of the study is limited to the Ring Road Branch only. The report covers the organizational structure, background, functions and the performance of the bank.

Methodology

The methodology of this report is very different from other reports. For the analysis part, data have been collected from IT department, different statements and the annual reports of the bank.

While preparing the report, we have taken information from the following sources:

1. IT department of Mercantile Bank Limited.

2. Websites

3. Annual report of the bank.

4. Insight of bank

Sources of Data

In this report, we have relied on both primary and secondary sources of data. The sources are as follows:

 Primary Sources:

1. Oral and informal interview of officers and employees in Mercantile Bank.

2. Practical work exposures from the different desks of IT Department of the bank.

3. Personal observation.

Secondary Sources:

1. Annual report of Mercantile Bank Limited.

2. Printed forms and documents supplied by Mercantile Bank Limited.

3. Relevant books, journals, Booklets.

Structure of the Report

This report is consisted of Eight chapters.

►In the first chapter, background, objectives, scope, methodology, limitations of the report is discussed.

►In the second chapter of this report, try to give an overview of on-line communication system of the Mercantile Bank.

►In the third chapter, MBL’s business process of the E-banking.

► In chapter four MBL’s Architecture & infrastructure of online bank

► In the Five chapter, performance of MBL

► The chapter Six provides Findings, Recommendation & Conclusion

► In the Seven chapter of this report, Ring Road Branch at a glance

►In the chapter Eight provides Bibliography

Limitation

1. Although we have obtained wholehearted co-operation from employees of    Mercantile Bank Limited, Ring road branch but they could not manage enough time to deal with our report.

2. The annual report is the main secondary source of the information but this information was not enough to complete the report and it should not identified clear idea about this bank.

3. The main limitation for us was the fact that Lack of information due to   confidential reason.

Chapter 2

Overview of E-banking of MBL

What is Business Communication?

Business communication is any communication used to build partnerships, intellectual resources, to promote an idea, a product, service, or an organization – with the objective of creating value for the business.

Internal and External Communication:

Business Communication encompasses a huge body of knowledge both internal and external for the business.

Internal communication includes communication of corporate vision, strategies, plans, corporate culture, shared values and guiding principles, employee motivation, cross-pollination of ideas, etc.

External communication includes branding, marketing, advertising, customer relations, public relations, media relations, business negotiations, etc.

Whatever form it takes, the objective remains the same – to create a business value.

MBL’s IT and its use as a source of competitive advantage

Competing for customers is nothing new for banks and lending institutions. The competition is simply more intense as the demand for loans and financial services increases. Yet while lower rates can get a customer’s attention, service often determines

Whether they remain a customer for the long term. When it comes to their own banking needs and schedules, consumers want convenience. They want service that’s efficient and personalized. At a branch location, in the main office, from a contact center, even banking by phone and online. Add it up and a customer’s banking experience requires total continuity and collaboration across a financial organization, including from a growing number of mobile workers. Add it up again, and convenience, service and efficiency put a lot of pressure on a communications system.

E-banking helps to do the administrative function with much ease. It helps administration to communicate both internally and externally. Such as administrative officer needs to issue a memo to finance and marketing department. In old days, he/she needs to write a memo but with the help of IT he/she can send the memo through email. Communication is much faster and easier in modern communication. It support externally as well as internally. So we need to know the technology which drives the communication system from behind. In next two chapters discuss about the infrastructure and the business process of E-banking of Mercantile Bank Ltd.

The use of information technology (IT) as a competitive weapon has become popular; but there is still a marked lack of understanding of the issues that determine the influence of information technology on a particular organization and the processes that will allow a smooth coordination of technology and corporate strategy. Now a days IT has become commoditized which makes ubiquitous IT a necessary expenditure for a firm but without gaining any competitive advantages. Though the public banks in our country are far behind these facilities still today but all the private banks can’t even think to survive and compete in the banking industry without being IT capable. Only the Level of their achieving greater facilities and the way that makes them cost effective to the customer varies.

 The challenges of MBL on E-banking

Some objectives outlined Mercantile Bank’s customer service and business communications needs. The biggest objective, however, was to find a single communications system that could help meet each goal by reaching every corner of Mercantile Bank’s distributed banking operation. Improve customer service, as well as service offerings

•   Enhance current service offerings

•   Support self-service automation

•   Make service faster and more attentive organization-wide

•   Increase productivity by increasing efficiency

•   For business users at the main office and each branch

•   For agents and supervisors in the contact center

•   For remote agents/ employees and mobile workers

•   Improve communications control and business continuity

• Move from the individual communications systems at each branch to one “global”    system and central administration for all Mercantile Bank branch locations and enterprise operations

• Streamline customer interactions and business communications between the main office, branch service centers, the contact center, and remote employees.

 IT in banking industry

Banking has always been a highly information intensive activity that relies heavily on information technology (IT) to acquire, process, and deliver the information to all relevant users. Not only is IT critical in the processing of information, it provides a way for the banks to differentiate their products and services. Banks find that they have to constantly innovate and update to retain their demanding and discerning customers and to provide convenient, reliable, and expedient services. Driven by the challenge to expand and capture a larger share of the banking market, some banks invest in more bricks and mortar to enlarge their geographical and market coverage. Others have considered a more revolutionary approach to deliver their banking services via a new medium: the Internet.

Activities of MBL In E-banking

E-banking allows customers to perform a wide range of banking transactions electronically via the bank’s Web site. When first introduced, E-banking was used mainly as an information presentation medium in which banks marketed their products and services on their Web sites. With the development of asynchronous technologies and secured electronic transaction technologies, however, more banks have come forward to use Internet banking both as a transactional as well as an informational medium. As a result, registered Internet banking users can now perform common banking transactions such as writing checks, paying bills, transferring funds, printing statements, and inquiring about account balances. Internet banking has evolved into a “one stop service and information unit” that promises great benefits to both banks and consumers.

Within a short span of time Mercantile Bank has established itself as one of the fast growing local private banks. It has at present a network of all branches serving many of the leading corporate houses and is gradually moving towards retail banking. Another significant delivery channel is its own as well as shared ATM Network. Mercantile Bank has a network of Forty-one ATMs. The other 19 ATMs are shared through ETN with eleven other banks.

Mercantile Bank symbolizes modern banking with innovative services in Bangladesh. It provides E-banking, ATM Support, SMS Banking Services in the country. Their newly developed web application is fully authentic, secured and robust. This technology based services also provides customer Fund Transfer through internet, Debit/Credit Card

Facility and free SMS message of special type of withdrawal from your account time to time.

All branches under E-banking system will be able to do banking practices using a common server (which is centralized) from where only the branches will be able to enter using a common password. Any one including any client or any branch from any direction will be able to enter in the system to do banking transactions. Mercantile Bank’s E-banking includes the following segments to provide services:

1. Internet Banking
2. SMS Banking
3. Mobile Banking
4. ATM Banking
5. Thumb pays Banking.

Chapter 3

MBL’s Business process of E-banking

Internet Banking Services of MBL

Internet banking is very different from traditional IS. That is, Internet banking uses emerging technologies, such as the Internet and WWW, and enables customers (users of Internet banking) to perform financial activities in virtual space. Research on customer acceptance of Internet banking may, therefore, enhance the under standing of a customer’s beliefs to make him/ her use Internet banking, and show how these beliefs affect Internet banking customer behavior. Mercantile Bank also provides internet banking services. Internet Banking service Provides up-to-the-second account information, Internet Banking lets you manage your account from the comfort of your mouse – anytime, anywhere. Introducing a simpler way to register for Internet Banking Say goodbye to long queues and paper work. Presenting one more reason to register for Internet Banking.

What can I do using Internet Banking?

          View Account Balances & Statements

          Transfer Funds between accounts

          Create Fixed Deposits Online (FD)

          Request a Demand Draft (DD)

          Pay Bills

          Order a Cheque Book

          Request Stop Payment on a Cheque

Business process:

To have internet banking facilities customer has to open an account in Mercantile Bank. Customer can open the account in any branch of Mercantile Bank. Customer can open account following the traditional Procedures of opening account but in this case he has to mention that he wants E-banking facilities. Customer has to provide an email account also. Mercantile Bank updates all the information regarding each and every transaction of the customer in their central database. When customer wants any kind of internet banking facilities he has to go to the website of the bank. After that he has to provide his account number and PIN (personal identification number). When he enters these information through the website of the bank he can connect to the central database form where he can take the facilities he wants. When bank get the required account and PIN number then the server which has division for specific services check the information’s authenticity. If the information provided by the customer is authentic then the server gives access to customer for the information required. Customer’s account information is identified, and a response is created and sent back to internet banking.

SMS Banking Services of MBL

The telecommunications industry worldwide has scrambled to bring what is available to networked computers to mobile devices. Presently, the use of electronic banking is considerably high and as more and more users sign up for electronic- banking, the maturity as regards remote banking (i.e. banking outside the banking hall) is on the increase. With electronic banking, users can now conveniently carry out banking transactions, but this convenience cannot be achieved if the user does not have access to the internet, hence, in other words, the user cannot carry out a banking transaction while waiting for a bus, or perhaps while having lunch in a restaurant. With SMS banking, convenience can be achieved 24hrs a day. This is because a user has access to his mobile phone all day, at all times. So, to effectively achieve a truly convenient banking mode, a truly mobile mode of banking has to be explored, hence the need for SMS Banking.

The SMS banking solution targets the retail banking industry and enables customers to make account enquiries and transact bank accounts through mobile phones. Banks can automatically send transaction notifications and alerts to mobile phones, if specific events in the banking business work-flow occur. The solution provides convenient and latest front-end technology and a flexible architecture to support an SMS based delivery channel and to provide significant benefits for both the bank and the customer. Mercantile Bank provides the following SMS banking services.

► SMS Push service: when any amount is debited or credited from client’s account then within 5-10 seconds he will get a message. The message includes the beginning balance, the amount debited or credited and the last balance. This facility is only available for Grameen Phone and City cell subscribers.

► SMS Pull service: Every registered Grameen Phone and City cell subscribers can check their account balance through this service. They can get a mini statement of last five transactions of their account.

Business Process:

SMS Banking is a Mobile technology that allows you to request and receive banking information from your bank on your mobile phone via Short message service (SMS). Individuals or corporate bodies can manage their bank accounts, check their account balances, perform check requests, money transfers, pay some bills, and perform other banking transactions using their mobile phones. There are two methods of SMS widely used in applications; they are the PUSH & PULL. Push SMS is sending a message from an application (i.e. SMS Server in this case) to the Mobile Phone. It is a one way message. In other words, it’s the mobile application (in this case, the SMS banking application) that initiates a message. An example could be a deposit alert, which alerts the user when a deposit is made to his/her account. Pull SMS is sending a request and obtaining a reply. This is a full duplex scenario where a user sends a request to the SMS banking application and the application replies with the information requested. An Example is when a user requests his bank account balance.

A customer willing to have this service has to have an account with Mercantile Bank. He can open his account following the traditional method but he has to mention about the specific services at the time of opening the account to get sms banking facilities. The customer must be a subscriber of Grameen Phone or City Cell Telecommunication Company. Mercantile Bank maintains a symmetric dedicated line with Grameen Phone and City Cell. This line is like intranet and not for public use. A customer willing to have this service will provide his account number and PIN code through sms to a specific number provided by the bank. After getting the sms Grameen Phone or City Cell will check the Code and tracking number of the customer. Then the companies will send the requirement of the customer with the specific tracking number to Mercantile Bank. Mercantile Bank will then check the number whether they match with the information kept by them. If the information matches with the information kept in the database of the bank then the bank send the information to the Grameen Phone or City Cell. Then the company provides the information to the customer.

 ATM Banking Services of MBL

Automatic teller machines (ATMs) ensure that cash is easily accessible, whenever and wherever someone needs cash. It helps businesses facilitate cash-only transactions and you avoid the mounting fees of credit card processing or check cashing, while also generating revenue for your business via a share of the transaction fees collected by the ATM provider. The Bank carries its banking activities through all branches in the country. Mercantile Bank customers have access to forty-one ATMs as a member of ETN. Under the ATM network the software enables direct linking of a client’s account, without the requirement of a separate account. The Bank has already set up its own ATM machine at 15 corresponding branches and is also in the process of setting up its own ATM network at every focused point in the city with a view of providing retail banking services.

Business Process:

After opening a bank account in the bank the customer is provided with ATM card and also his password. Customer will go to any ATM booth of the bank and punch his card and then provide the password with mentioning the required amount of money. When he provides his password the bank check it with their database information. If there is balance in the customer’s account the server of the bank give the ATM machine confirmation to provide the customer the required money.

Mobile Banking Services of MBL

 Mobile banking services is like SMS banking services. A customer can get necessary information about A/C, transaction etc

Thumb Pay Banking Services of MBL

Mercantile Bank Limited has proudly announced the launching of its (M-Banking Product) “THUMBPAY”. It will allow its customers to access their bank accounts from their Mobile Phone. This latest technology driven product is designed to cater for and facilitate real time banking transactions using a mobile phone and will be currently available to AKTEL subscribers only.

Customers need to fill up a registration form for “THUMBPAY” service. All branches of Mercantile Bank are ready to give this service to its valuable clients.

Services available under “THUMBPAY”

 1. Account Balance Query: Clients can check their account balance at any time and from anywhere in the Bangladesh just after 15 seconds from their query through SMS

 2. Pre-paid refill: Eligible clients will be able to share the pleasure to refill their own account and also the account of third party through SMS.

3. Post paid bill Payment: Post paid AKTEL subscribers can pay their mobile bill as well as others from their account through SMS.

4. Fund Transfer service: Customers will be able to transfer fund from one account of Mercantile Bank to another.

5. Changing password: Every customer will be given an initial password to avail the “THUMBPAY” service. They can change the password subsequently by SMS.

6. Real Time Round The clock: This service is available round the clock and real-time basis from anywhere.

Business Process:

Customers willing to have this service must fill up the specific registration form. Then he will be given an initial password. This password is changeable at any time. Then customer has to send sms by following a specific procedure required by Mercantile Bank and AKTEL, including his password. Mercantile Bank has established a symmetric dedicated line with AKTEL which is like intranet and of no public uses. When AKTEL get request from the customer, it send the information to Mercantile Bank. Then it checks its database for required information and confirms AKTEL for the information or transfer the bill from the customer’s account to AKTEL’s account. After getting confirmation AKTEL give the information to the customer or recharge the required account.

MBL’s two key feature of Business Process

Customer Response Time: Customer response time is very important in E-banking. If customer does not get response in proper time then it can be the cause of losing their confidence. Mercantile Bank is very much concerned about this matter. They try to response within 15 seconds after a customer command for their requirement. But maximum time it depend on some matters like

• Volume of information required by the customer
• Network Speed of Mercantile Bank.
• Network speed of the mobile phone companies.

If customer wants any specific transaction data then it is very easy to ensure the response rate within 15 seconds. But when customer require one year’s transaction details then it require some times Network speed of Mercantile Bank is maintained by three companies Rankstel, Ektoo Limited, Link3. They are very sincere in marinating a very high speed which can provide customers information in a required way.

Accuracy of Data:

If any mistakes or wrong information is identified by the customer or any employee of Mercantile Bank which was happened at the time of data entry then it is to be informed to the respective manager. Customer can inform him through the Complain Center of Mercantile Bank. Then the manager can edit the correct information according to the authority he has been given.

Chapter 4

MBL’s Architecture and Infrastructure of E-banking

Need for a standardized infrastructure in banking

Many large banks built their teller system, branch platform, call center, and other channel applications separately over many years. These applications often communicate with disparate core application systems and are in effect in silos that don’t communicate with each other. This lack of integration affects customers as well as frontline bank employees and operations staff.

To transform the customer, employee, and operations experience, banks need to integrate their systems to deliver a seamless, cross-channel experience, and that requires a standardized technology infrastructure based on industry standards.

As a for profit organization, Mercantile Bank wants to improve stockholder wealth as well as contribute to the poverty reduction as part of corporate social responsibility (CSR). They want to introduce very high class banking to support business. That satisfy customer, improve business environment and encourage country’s growth.

 MBL’s Information Technology Architecture

Now a day banking industry fully depends on information flow. Payments, receipts all those things done in eyeshot. So to be competitive, Mercantile Bank also needs to provide services as fast as possible. The main concern of IT for Mercantile Bank to reduce processing time of the user. They concern about following Business Requirements to set up IT architecture:

• Bank must maintain a one stop databank for its entire user.
• It should maintain a hot line with all of its branches and partners both nationally and internationally.
• It should provide the information to its customer with very flexibility.
• It should keep its central database up-to-date as soon as the transaction is incurred.

• It should provide information to its customer through website, mobile devices etc.
• It should segment it’s IT in two distinct parts: Maintenance and Development.
• Its service need to be cost competitive.

 MBL’s Information Technology Infrastructure

In order to support the above business requirement the bank needs a very strong infrastructure, which must provide speed and accuracy. The infrastructure also must provide cost competency so that the profitability is not hampered while maintaining the reliability of the customers. Infrastructure consist mainly four types of components. They are

• Hardware
• Software
• Network
• Data

Hardware:

Mercantile Bank uses mostly PCs. These PCs have communication facilities and access with the server situated in Scotia branch. They have currently 560 personal computers for their operations. Because of confidentiality and some other protocols, we can not obtain exactly how many computers are used for the above business requirements. These personal computers are branded (e.g., IBM, DELL, & COMPAQ). These computers are connected to each other.  They use a server in the databank. It maintains all the channels of different branches, operators, international organization (SWIFT), and ATM booths. They maintain wiring in fiber optical cable. This communication hardware is supplied by the network service provider.

 Software:

Mercantile Bank use integrated software for all their banking activities. Its name is Stellar. This software is developed by ERP, a joint venture of Ranks It, Mercantile Bank and Dubai based software developing firm Emirates. Mercantile Bank in sourcing the package because they want to develop the IT as their business process needs. They achieve flexibility by maintaining an in house IT department. Continuously they develop and add features to their software and satisfy business needs accurately.

Key benefits:

• Saves valuable time of user
• Provides secure transactions
• Provides valuable information
• Makes Banking easy
• SMS passes information quickly
• Provides alert

WAP banking provides:

• Single point solution for both customers and banks
• Reduced cycle time in transactions
• Any-where any-time access
• Integrated Web based Infrastructure for banking
• Low rollout costs
• An extensible and distributed system with fast information routing
• Enforce business rules
• Provides online information on the status of user requests, thus saving time and effort on follow-up – Easy to track different activities status.
• Personalization and Membership
• Digital Signature based Authentication and Security for users and application

• Architecture for designed to be scalable and support high-volume multiple transactions Windows 2000 platform.
• DNAs framework to interoperate with existing IT infrastructure and applications

Network:

To provide speed and reliability to its customer Mercantile Bank has to maintain a well established network with all of its branches and co partners. Mercantile Bank is connected with every branch all over in Bangladesh. The network description is given below

• High Speed DDN and Radio Link connectivity between Branches and the Head Office
• Local Area Network (LAN) – providing data network connectivity at the Head Office and the Branches
• Metropolitan Area Network (MAN) – connecting the DHK branches with HO, CTG branches and SYL branches.
• Wide Area Network (WAN) – enabling the data network circle between Head Office and the Branches
• Dial-up lines, routers, hubs, switches and firewalls according to the requirements of the network systems.
• An especially dedicated line with GRAMEEN PHONE, AKTEL and CITY CELL.
• Solid foundation over data and network security implementation

 Data:

Mercantile Bank maintains a centralized database. This database is maintained by the IT department of the bank. Data is updated by the employee engaged with the related transactions. Every employee has specific authority about editing the database. Any type of change in database beyond that limit is punishable. The branches are connected with the head office and up-to-dates the database following every transaction. The database comprised with the PCs created a Client-Server network. The server is at the head office and the branch PCs as well as other PCs at the head office are clients. At the same time

all branches have their unique code through which they can access to the main server and share data from there.

Chapter 5

Performance on E-banking of MBL

Performance of MBL in various division       

 Actually there are Four department comes for discuss on performance in E-banking of MBL-

 General Banking division

Banking operations start with general banking. This department provides day-to-day services to the customers. Everyday it receives deposits from the customers and meets their demand for cash by honoring cheques. It opens new accounts, remit funds, issues bank drafts and pay orders etc. Since bank is confined to provide the services everyday, general banking is also known as ‘retail banking’.

 However all section of general banking of MBL are online base where a Customer can maintain their need with MBL’s Network. Such as-A Customer can transfer Cash (money) & Interest (in case of FDR) one account to another account and can get necessary Information about all section.

Remittances

 Remittances in March 2011 stood higher at USD 1102.98 million against USD 986.96 million of February,2011.Total remittance receipts during first nine months of FY2010-11 increased by4.12% to USD 8,611.02 million against USD 8,270.04 million over the corresponding period of FY2009-10.

Foreign Exchange Reserve

The gross foreign exchange reserves to USD 10.73 billion at the end of March,2011 against USD 11.16 billion by end of February, 2011.The gross foreign exchange reserves, without ACU liability id equivalent to import payments of 4.05 months according to imports of USD 2,498.88 million per month based on the previous 12 months average (March-February,2010-11)

However MBL’s have Wide Network for Remittance Arrangement with various Country’s Exchange Company. Such as-

1.  UK

          Rumana Money Exchange

         SN Money Exchange

          Rupali Money Exchange

          Trust Exchange UK Ltd

          Euro Bengal Money Exchange

          AN Express Ltd

2. CHANADA

         Nuz Exchange Ltd

         Bangladeshi Money Exchange Ltd

         United Exchange

         Asia Pacific Foreign Exchange

         ICICI Bank

3. Unite Arab emirate

         Wall street Exchange center

         Al-ahalia Money Exchange

         Economic Exchange Co.

4. Italy

         National Exchange Co SRL.

         Global Exchange Italia SRL

5. Turkey

            Al-Musa Exchange

6. USA

          Maniflo Money Exchange

7. Cater

          Al-jaman Exchange

8. Web Based

Western Union Money Transfer, Xpress Money Service, Instant Cash

Credit division

Credit division is a vital division because of profit & loss of bank depend on this division.

Functions of Credit Section:

The following things are done in this department:

  Preparation of sanction letter as per Ho approval.

  Monitoring & follow-up of credit facilities extended from this Br.

  Preparation for proposal of Project loan for boards Approval.

  All works related to custodial service.

  All type of correspondence related to credit section.

  Preparation of Credit Memos for approval/renewal of the Credit facilities.

Processing of Consumer Credit Loans & preparation of all statements of the Consumer Credit Loans

 Foreign Exchange division

It is a matter of regret that because of being a new branch Foreign Exchange department is absent in this branch though it is a most important part of a bank, because this department proves itself as the better performing department of the bank. This department contributes more than fifty percent of the total earning of a bank and earns most of its revenue as fees, exchange and commission. In most of the cases this is a non-funded business except in some of the cases. Though there is a burden of huge amount of none performing loan, banks operating in Bangladesh could manage to be in existence due to this foreign trade related earnings. The principal business of this foreign exchange department is to help/support international trade. The Major functions of Foreign Exchange department is to help Import, Export, Remittance, Selling of Foreign currency and maintaining of FC accounts of different in nature. The Regulatory framework is the Import-export policy of Bangladesh government, The Guidelines of Foreign Exchange Transactions- 1947 and the circulars of Bangladesh Bank.

However The functions of MBL (which is online basis) can be divided into three broad categories which is online basis for the purpose of discussion. Namely:

  Import

  Export and

  Remittance

Import

Import activity starts from opening of an L/C in favor of the beneficiary/Exporter in a bank. As a result the exporter gets the guarantee for payment of his goods.

  Export

Foreign Exchange Regulation Act, 1947 nobody can export by post and otherwise than by post any goods either directly or indirectly to any place outside Bangladesh, unless a declaration is furnished by the exporter to the collector of customs or to such other person as the Bangladesh Bank (BB) may specify in this behalf that foreign exchange representing the full export value of the goods has been or will be disposed of in a manner and within a period specified by BB.

Bangladesh exports a large quantity of goods and services to foreign households. Readymade textile garments (both knitted and woven), jute, jute-made products, frozen shrimps, tea are the main goods that Bangladeshi exporters exports to foreign countries. Garments Sector is the largest sector that exports the lion share of the country’s export. Bangladesh exports most of its readymade garments products to USA and European Community (EC) countries.

Remittance

This function is running on a very small scale MBL. Very insignificant amount of outward remittance is made every month. The Portion of Inward remittance is also negligible (except export business). There are not education file opened in this branch.

 Remittance is of two types,

  Outward Remittance

  Inward Remittance

Outward remittance is needed for traveling purpose, Health care, education, membership fees of international organization, participate in trade fair abroad, credit card payment etc. Bank requires to provide the TM form to customer and filled them up. Customer also submits the documents necessary to justify the purchase of foreign exchange, for example, for travel purpose, the passport with visa, two way air tickets etc. For education purpose, the offer letter, the estimation of expenses provided by the university etc. For health purpose, the opinion of the medical board of a hospital. If bank is satisfied then bank sells the FC.

For travel purpose the amount maximum bank can allow is $ 3000, per person a year and maximum $1500 in cash and the remaining amount in Travelers Cheque. But before getting visa bank only can sell $ 200. The amount is $ 1500 for SAARC countries in air travel, and $ 500 in road.

If bank receive any inward remittance, bank informs the beneficiary to collect the money after providing the documents necessary to identify him. If the amount exceeds $ 2000 then the beneficiary must fill up the “form C” as rule provided by Bangladesh Bank to inform the purpose of the remittance.

Card Division

Card division is totally online base it provided Debit and credit Card.

Compare with Other Banks     

MBL’s Philosophy –“efficiency is our strength” it is spot on .E-banking Performance of Mercantile Bank Ltd is very superior. MBL’s employees have sound Knowledge about E-banking because of Mercantile bank Ltd most of time arrange training program for employee on E-banking. So, MBL is best online bank without some modest problem than other bank. This are-

► MBL’s employee are sound Knowledge about E-banking than other bank.

► It has wide network than other bank.

► Online charge is total free in metropolitan area for online transaction.

► There are no service charge on debit card for first year

► There are large number of customer than other bank

► If online charge is few high but services are high-class for Customer.

► Good relationship with customer than other bank.

Chapter 6

Findings, Recommendation & Conclusion

Findinding       

During my internship at Mercantile Bank Ltd., Ring Road Branch I have observed many positive things as well as naturally few problems which can also be overcome very easily. Those findings are tried to discuss below

Positive Findings

  A large number of customers continue their truncation with MBL’S E-Banking

  Wide range of E-Banking

  Excellent customer service compared to the competitors.(By E-Banking)

  It has got an excellent working environment for Customers of E-banking

  Relationship among employees is very friendly and cooperative

  E-banking customer service is very prompt

  Use of debit and credit card is being increased

  The management and the employees work as a team

  Employees are hardworking, they regularly have to work beyond their working hour

  MBL arranges different training program for their employee on E-banking

  Employee salary structure good

  MBL earns high profit because it has a large number of online customers.

  Provides E-banking facilities to its customer, which would help the bank to attract deposit.

  Employees are sound Knowledge about E-Banking.

  Account holders can withdraw their deposit from any branch they want.

  To control BTB import MBL asks the exporter for the budget, what materials need to be procured what quantity and at what rate and what is their cutting. This is another strong point of MBL.

Negative Findings

  E-Banking (Online) Services charges are high.

  Numbers of employees are not sufficient for IT Section.

  Foreign remittance business(which is transaction depend  on the basis of online) is very limited due to lack of manpower

  All branch of MBL are not available E-Banking facilities.

   MBL’s Online Servers are not so strong for this reason create some problem

  All branch do not use online Network for Clearing cheque, some branch send hard copy of cheque instate Image of Cheque to Clearing house but it is not good process so, bank can’t immediately  inform about that cheque to customers.

  Do not provide separate Prospectus on E-banking for customer.

  The authority of debiting a customer account of one branch by another branch in E-banking certainly increases the risk of misappropriation of account holder’s fund by any branch staff

  Threats

• There are some competitors available in the market.
• The customers are very much aware of the E-banking activities.

Recommendation         

By analyzing Mercantile Bank’s IT sector I can identified some critical factors which are very much important for E-banking communication system. These are:

• Improved accessibility, reliability, user-friendliness and security in   the IT systems and services made available to the customers.
• Adequate and appropriate facilities with pertinent standards and guidelines which are being regularly updated to meet challenging and changing needs.
• Acceleration of IT literacy and sophistication among the users.
• enhance More employee for It Section.
• A need to identify the administrative procedures that can be improved using IT and to target administrative and faculty heads and their administrative support personnel to adopt new IT-based processes.
• Top-down involvement and support is essential to bring about effective gains in the use of IT.
• Reduce Online charge
• Competitive remuneration and rewards for IT staff.
• Co-operative involvement of staff (both IT and administrative) and decision makers in the use of IT for appropriate alignment with business requirement and IT technology, and appropriate incentives to encourage such efforts.
• Greater accountability in services, support and usage of IT resources

Mercantile Bank should fulfill the above criteria to provide customer the best service which will add value to their company while at the same time will make them able to survive in the competitive field.

Conclusion

Effective communication sets the foundation for individual and organizational success. Communication in today’s business place has become more complex, with the introduction of technology presenting both opportunities and challenges. Robust organizations demand effective communicators that can effectively manage business and organizational changes, concerns or events using technological as well as traditional means.

From the practical implementation of customer dealing procedure during the whole period of our practical orientation in Mercantile bank limited we have reached a firm and concrete conclusion in a very confident way. We believe that our realization will be in harmony with most of the banking thinkers. It is quite evident that to build up an effective and efficient communication system to the highest desire level computerized transaction is a must.

The MERCANTILE BANK LIMITED has been trying to operate its business successfully in Bangladesh from 1999. MERCANTILE BANK LIMITED has already developed an image of goodwill among its clientele by offering its excellent services. This success has resulted from dedication, commitment and dynamic leadership of its management over the period. Despite the fact that, during the short span of time of its operation, the bank could successfully occupy a position as a progressive and dynamic financial institution in the country, it suffers from some weaknesses, it is expected that in the near future MERCANTILE BANK LIMITED may become one of the top performers in the banking sector.

In last words, it can be state that, Mercantile Bank is a moderately advance IT based bank. But the important thing is that their IT strategy completely matches their corporate strategy. As a new bank it is still improving their IT sector. They initiate Enterprise Resource Program (ERP) for their bank that is an integrated database and workstation. Initiation of ERP boosts their performance largely.

Chapter 7

Ring Road Branch at a glance.

 RING ROAD BRANCH AT A GLANCE.

MBL Ring Road Branch started its operations as 65th branch at Choice A/j Golden tower in 30^th December, 2010. This branch is located at, Ring Road Shamoly, Dhaka. 1st floor of a multi-storey building is rented for operating the branch. General Banking section, the largest section of the bank occupies the whole ground floor. A part of the ground floor is used as an ATM booth.

MBL Ring Road Branch has not got Authorized Dealer licence from Bangladesh Bank to perform foreign exchange business. The import and export businesses that are usually done in this branch increases the profitability of the bank.

This Branch is headed by Md, Kabir Hossain. He is assisted by Kazi Abdul Wadud, who is also very experienced in his job. The total number of staff is 23 now. The branch has been performing very well, under Mr. Kabir’s effective leadership. The branch has already been able to introduce itself as one of the best performers among all other branches of MBL.

Branch has efficient human resources that can meet up customer’s needs. Interpersonal relationship is remarkable. But workload per person seems to be quite high though the picture is almost same for all the private bank employees. Some sections are overloaded with work, for example, accounts section etc.

Customer service of Ring Road Branch is excellent. Prompt, cordial & enthusiastic service satisfies almost all customers. Banking hour is slightly flexible that attracts more clients doing banking transactions with the branch. Since the branch is located at Ring Road and it is a new branch, the pressure of customer service is not so high. The problem is at the end of the banking hour some transactions are made. And the officers find it difficult to receive those cash in time, because they also need to be very careful about fake notes.

The performance of mobilisation of deposit from the branch is a great effort, but the credit-deposit ratio is not up to the mark, that affects the branch profitability badly. If the branch could get opportunity to invest more of its fund by itself then it will be a better performing branch in future.

Performance Of Ring Road Branch At A Glance

As On October 17, 2011

 Comparison: overall Bank’s performance & Branch performance

           As on 30.10.2010                                                        (Figures in lac.)

 In some aspects branch’s performance better, for example average cost of fund is lower (8.84%) than bank’s average (9.00%), net interest margin is also higher (4.33%) where

for the bank it is 4.11%. Operating profit is not so bad. In some aspects branch performance is poor, the credit deposit ratio is only 52% (for bank it is 83%) which is the main reason why branch’s spread is only 1.61% whereas the overall banks interest spread is 5.69%.

In order to make the branch more profitable the branch should look for some opportunities for investment its fund. Since a large portion of its fund is invested with the H/O only at a rate 8.00%, which is lower than its average cost of fund.

 Loans & Advance Position

MERCANTILE BANK LTD.

RING ROAD BRANCH, DHAKA

Loans and Advance Position As On 30.10.2010

 This Branch can not achieve the target of its loan and advance in this year. Branch do not make any long term loan yet. May be due to the absence of opportunities, or to avoid risk, but if the branch would invest some of its fund in long term loans, then the picture of the branch’s performance would be better.

Deposit Position Of Ring Road Branch

MERCANTILE BANK LTD.

RING ROAD BRANCH, DHAKA

As On 30.10.2010

 As a new branch of MBL, Ring Road Branch’s contribution to overall bank’s performance is growing. There is every possibility that this trend will continue in future.

Chapter 8

Bibliography

Books:

• Jeff Madura; “International Financial Management” 9^th edition, Thomson, South Western.
• Engg.Muzibur Rahaman Khan; “Fundamentals Method of Compute’’ 4^th edition, Uddai Publication, Dhaka, Bangladesh.
• Brigham, Eugene F; Houston, Joel F. (2004), “Fundamentals of Financial Management,” 10^th edition, Ohio, Thomson, South Western.

Websites:

• www.bangladesh-bank.org, accessed on 18/11/2011 at 4pm.
• http:// www.mblbd.com, accessed on 28/10/2009 at 11am. And 18/11/2011 at 11pm.

Report/ Prospectus:

• Prospectus of Mercantile Bank Ltd.
• Insight of Mercantile Bank Ltd.
• Brochures Of Mercantile Bank Limited
• Annual Report (2001-2002) Mercantile Bank Ltd.
• Annual Report (2003-2004) Mercantile Bank Ltd.
• Annual Report (2004-2005) Mercantile Bank Ltd.
• Annual Report (2006-2007) Mercantile Bank Ltd.
• Annual Report (2007-2008) Mercantile Bank Ltd.
• Annual Report (2008-2009) Mercantile Bank Ltd.
• Annual Report (2009-2010) Mercantile Bank Ltd
• Recent Half year report of Mercantile Bank Ltd