Report on Performance Analysis of IFIC Bank Limited

I)Background of the study

In Bangladesh, Banking industry has matured to a great extent than earlier period. It has developed superb image in their various activities including online banking. Now modern banking services have been launched by some multinationals and local commercial bank. IFIC BANK LTD is not an exception in this case. Online banking is one of the most demanded forms of latest technologies in banking sector. Application of technology in IFIC Bank Ltd has already proved to be effective by offering opportunity for reduction of both paper and people. The Bank has taken up a new project with Misys International Banking System Inc. (UK) to further upgrade its banking operation to state-of-art world class on-line banking solutions to provide faster and even more convenient centralized services to the clients. It has enabled the bank to protect and increase market share, to reduce operating cost by substituting physical capital and technology for labor and to generate new revenue. Online banking allowed the Bank to expand its markets for deposits and allowed it to extend credit activities. This has also enabled the Bank to offer new products and services and to strengthen its competitive position in offering existing payment services. Since the importance of Web presence in the Internet is absolutely critical, IFIC Web Site www.ificbankbd.com has long been launched for the convenience of the customers, where all the activities and information are constantly being posted and updated. A Central Mailing System is operational at the Head Office to let the customers have direct online access to the selected staff

This paper will try to unearth the improvement of efficiency and profitability of IFIC BANK LTD due to introduction of Real Time Online Banking: MYSIS ONLINE SOLUTIONS.

II)              Statement of the problem

The new information technology is becoming an important factor in the future development of financial services industry and especially banking industry. Bank is faced with a number of important questions, for example how to take full advantage of new technology opportunities, how e-developments change, the ways customers interact with the financial services provider etc. E-banking is the newest delivery channel for banking services. Due to upsurge in the number of competitors in the banking arena online banking can be a major tool with the help of which certain innovations can be made possible. This innovation may help to increase the market share of the Bank with improved provisions of services resulting in increased profits.

Customers of Bank today no longer are concerned about safety of their funds but are concerned with the increase in returns on their investments. Customers demand efficient, fast and convenient services.  Customers want a Bank that will offer them services that will meet their particular needs (personalized Banking) and support their Business goals for instance; businessmen want to travel without carrying cash for security reasons. They want to be able to check their balances online, find out if a cheque is cleared, transfer funds among accounts and even want to download transaction records into their own computer at work or home. Customers want a preferential treatment and full attention by their choice Bank. All these are only achievable through online banking.

With the problems and limitations associated with manual banking procedures as witnessed in most parastatals today, complied with the problems associated with the existing application programs even much more in the presence of serious technological advances aimed at improving information system. This is activities aimed at shedding light upon the need for improvement in accounting activities and the means of achieving its efficiency, effectiveness, reliability and success promising future through computer intervention.

Online banking identifies a particular set of technological solutions for the development and the distribution of financial services, which rely upon the open architecture of the Internet.  With the implementation of an Online banking system, the Bank maintain a direct relationship with the end users via the web and are able to provide a personal characterization to the interface, by offering additional customised services.

III)           Objective of the study

The objectives of the study are as follows:

 a.      To evaluate the prospects of online banking of IFIC bank ltd.

 b.      To determine the improvement of services and efficiency of IFIC Bank due to introduction of online banking in the present Banking arena.

c.      To asses whether the provision of services has been made faster after the introduction of online banking operations.

d.      To compare the improvement of performance and profitability before and after the implementation of online banking operations of IFIC bank ltd.

e.      To determine whether online banking expanded the market share of IFIC bank ltd.

IV)Rational of the study

Today’s world is service oriented in every sector. Those who are giving much more services rather than others are giving; they will be well ahead of competition because of getting better competitive advantages. There are 48 different Bank working together in Bangladesh. The competition is going up day by day by giving better services and they are trying to develop their own services every now and then. Online banking is known to us since 1990. Online banking has got tremendous importance in banking sector and banking customer as well.

This will cover the benefits derived in using online banking and it’s fundamental.

ONLINE BANKING – HOW IS IT DIFFERENT?

Many consumers today are turning to the ease and convenience of online banking to take care of their financial needs. With the new levels of access made possible by the Internet, people can now check the status of their finances with the click of a button.

The history of Online banking has evolved from simply allowing customers to check balances online, to now being able to trade stocks and bonds from the comfort of their own home!

WHY USE ONLINE BANKING?

Online banking services have grown from simply allowing customers to check balances, to trading assets. Today, Bank are functioning entirely online, with no brick and mortar building. With the costs saved by requiring fewer employees and the lack of facility expenses, these virtual Bank can often offer higher interest rates than their traditional counterparts. Online banking gives the power to control finances completely. One is no longer tied down to managing money during the hours the bank is open. If one wants to transfer a balance after business hours, one can! If one has access to the Internet and have a number of recurring monthly bills, then you should use Online banking to make one’s life easier.

FEATURES OF ONLINE BANKING

Today, online banking services are quite varied. One of the best features of online banking is putting the user in control. The user controls all bill paying, transfers,

and investments from home .

There are other features, though of online banking. One of these is increased accessibility to one’s account information. Users of online banking services can access their account information from anywhere in the world! This is particularly helpful for businesses. Internet business banking is becoming increasingly popular, as businesses are becoming more global in their reach. Now business people can access their accounts, even when on overseas business trips. Business Online banking is extremely popular for this reason.

A particularly popular aspect of online banking services is the ability to make bill payments electronically. With a minimum degree of set-up, customers can enter the amounts of their paper bills (or opt to receive electronic bills) and process all their payments at one time, from one screen

Because of all these facilities offered in online banking operetions, I have developed some interest in exploring something regarding online-banking to some extent.

V)Methodology of the study

a)     Research Design

The study will cover on 2 of the branches of IFIC Bank Ltd namely, Federation Branch and Motijheel Branch. Data will be collected through questionnaires. In addition, the websites of relevant institutions will be reviewed for updated information. Clients from these two branches will be interviewed as sample which will represent the total IFIC Bank’s clients.

b)     Nature of the study

The nature of the study is a exploratory one. The study has been conducted to explore the development in the level of efficiency with respect to customer satisfaction and performance of IFIC bank ltd using Online banking. The study is framed to unearth the effects of undertaking automation on the improvement in customer service of employees of IFIC Bank Ltd. Automated service coupled with online banking is aimed to provide better, faster and efficient services to its existing clients to remain competitive in this era of immense competition in banking industry. Not to mention the profitability of the Bank as well due to implementation of Automated Banking.

c)     Population Size 

The Population Size consists of the total number of clients, executives and officers of 97 branches of IFIC Bank Ltd. The number of clients was 423655 as on 31-12-2010. Since the study will try to find out the level of efficiency of the employees, some data were needed to be collected from the officers and executives of the Bank. The total number of Executives and Officers of IFIC Bank Ltd stood at 2575 as at 31-12-2010. Therefore, the total population size of IFIC Bank Ltd was 426230.

d)     Sampling Frame

Since the population size became too large for the study to be conducted effectively, the population size was curtailed to sample size. Thus, the directory of The Bank was used to identify the number of executives and officers of The Bank. As far as the number of clients is concerned the information has been collected from the record of the total number of accounts on each branch and then the figure was summed up to arrive at the total.

e)     Sampling Techniques

The researcher used systematic sampling to collect the sample for this study. In most of the previous researches conducted on employees the researcher had used this type of sampling (Caruana, 1998). The sample size was 100 as in the previous research which was conducted on the financial performance of Bank the researcher has chosen a sample size of 100 and found effective match (Al-Hawari and Ward, 2005). Again, in this research the researcher used sample size of 35 because of time limitation and convenience.

The researcher used convenient sampling to collect the second sample. A sample consisting of 35 individual account holders of IFIC Bank Ltd were selected. The reason behind choosing non-probability sampling is that:

i)       If the researcher would have gone for probability sampling for the customers, then a sample frame would have been needed to collect and from the list, a sample would have been drawn, which might have been larger enough to meet reasonable time and given cost. According to (Cooper and Schindler, 2003), “Cost considerations influence decisions about the size and type of sample and also the data collection methods.

ii)  The current researchers are going to extend the study of (Al-Hawari and Ward, 2005) in which the previous researchers use the sample size of 50 and find appropriate results as predicted. Therefore, the current researchers feel the sample size of 35 is safe to implicate in this research. This was mainly done considering the time and cost factors behind the research conducted.

f)      Data Collection

This research will be done through (i) primary survey and (ii) desk study.

i)                   Primary Survey: To gather data the researcher used questionnaires. The questionnaire survey is the most effective method for this study to collect data for this for the following reasons-

                                                                              i.      Respondent’s anonymity can be maintained

                                                                              ii.      The researcher conducted survey on a total of 35 respondents who are valued clients of the respective branches.

ii)                It was not possible to conduct personal interview because of time limitation. Therefore, questionnaire survey was the most appropriate one for this study. Structured questionnaires were used in this research to collect data from the customers. All the variables were measured using a 5 point likert scale.

iii)              Desk Study: Desk study was made through consulting different books, journals, and articles in the libraries. In addition, the websites of relevant institutions will be reviewed for updated information.

VI)            Presentation of report

The report in this paper has been has been segment into different chapters. Each and every chapter discusses each and every aspect of the paper. The following will give an overview of the chapters that have been brought up to sequentially present the report and disseminate appropriate information.

a)     Chapter 1 is the introduction of the report which details out the topic that has been reported, the background of the study, the methodology used to conduct the work, limitations that have been faced, etc.

b)     Chapter 2 gives a detailed picture of the topic giving definitions, explanations usefulness and limitations of online banking operations.

c)     Chapter 3 gives an overview of the studies that have already taken place relating to online banking. It shows different perspectives of different writers from time to time.

d)     Chapter 4 discusses about the organization in which the study has been completed, giving detailed idea about its foundation, missions, objectives, achievements, board of directors, management committee, etc.

e)     Chapter 5 consists of analysis of data by comparing past records of the organization. In this chapter likert scale technique was also used to scale the performance of the bank through the responses received from the respondents. This proved to be helpful as performance became easily to evaluate with the help of the scale. Then the chapter also consists of the discussions of findings.

f)      Chapter 6 includes the recommendations and suggestions of the reporter based on the above findings. The suggestions include present actions that can be taken and future developments that can be undertaken for the purpose of achieving broad organizational goals.

g)     Chapter 7 includes identification of the problems that the reporter had to face while preparing the report. The problems identified include the problems with the application of online banking and the abnormalities involved with preparation of the report.

h)     Chapter 8 reflects the summary of the major findings of the report with the help of which appropriate actions can be taken to improve the provision of services of the bank.

i)       Chapter 9 concludes the report with some prospects of online banking solution in Bangladesh and the future developments.

j)       Chapter 10 consists of name of several reports, journals, magazines, newspapers, articles and internet sites that have been studied for the purpose of successfully completing the report.

VII)        Limitations

There has no plethora research work in Bangladesh perspective particularly in regard to traditional banking system. The study will cover very limited number of branches and respondents due to time limitation. Comprehensive data related to manual and traditional banking system is unavailable. These data may only be available with the Bank that are yet to go 100% online. There are some limitations for conducting this study like many  respondents  have  a  little  knowledge  about  the  e-banking  services in Bangladesh. They have not enough time for responding to the questionnaires.   Only Dhaka city has been considered. In future, research may be done through doing survey on larger number of customers of the Bank and try to understand their satisfaction level on the basis of proxy determinants as level of satisfaction is a cardinal approach.  Moreover, currently transition period is going on due to the change of the system from the manual to the online banking system.  At  least  after  2/3  years  if  the  level  of  satisfaction  is measured  then  it  will  be  better  to  identify  whether  any  structural  breakthrough happened  among  customers  of  the  Bank  in  case  of  introduction  of  online banking in the Bank.

Theoretical Framework

Online banking as a segment of electronic business, which, in turn, encompasses all types of business performed through electronic networks. Electronic channels are used for both business to-business and business-to-customer transactions, such as ordering goods, delivering software or paying for such transactions. E-banking is considered to be a segment of e-business to the extent that Bank are involved in the conduct of business transactions via electronic media; other non banking financial products and services (e.g. insurance), not to mention products and services from other sectors of business may be sold electronically as well.

I. Online banking facilities given by IFIC bank ltd in Bangladesh are:

 Bank accounts: Savings, Current, FDR, PDS, Term Deposit Scheme

All these accounts are maintained in electronic way for the sake of customer 0satisfaction in Bangladesh. People can deposit their money through electronic device and also can withdraw their money such way. These are the common bank accounts which maintained by the bank customer every now and then and bank is also given high priority or facilities in this regards to their customer.

2.      Special Services 

IFIC bank renders special services to the customers

a)     Debit Point-of-Sale

POS is an advanced payment system which enables consumers to use an ATM Card to pay for goods and services, electronically debiting the cardholders account and crediting the account of the merchant.

b)     Cards: Credit/Debit Card

There are two different types of card. One is debit which designate to withdraw own money from the bank in any time. Another one is a credit system which provided by bank to their customer. Customer can enjoy their credit amount while they are in shopping, withdraw cash etc.

c)     Online banking   

Customers need an Internet access service to handle this type of banking. As an Online banking customer, he/she will be given a specific user ID and a confidential/secret or secured password so that they can access to their own account. Here customer can able to see the ledger balances, transfer his money, request something towards bank, etc.

d)     Home Banking 

Home banking frees customers of visiting branches and most transactions will be automated to enable them to check their account activities transfer fund and to open L/C sitting in their own desk with the help of a PC and a telephone.

e)     Automated Teller Machine (ATM)   

Full abbreviation of ATM is “Automated Teller Machine” which acts like a teller point in a bank who takes and gives money over the counter. ATM is same as teller point but it run automatically through identity like card and password. It does not need any slip or Cheque but it is very much based on A/C holder’s ATM card and it’s Password. Those who are entitled for ATM card, bank has provided them a password against every single card. This is like a debit card. People can deposit their money in a bank account and they have entitled withdraw their money through ATM card, which is applicable for 24 hours a day and 365 days in a year. It has different name such as ATM, 24 hours banking card, money link card, e-cash, ready cash etc.

f)      Tele Banking 

Tele-Banking permit customers to get access into their respective banking information 24 hours a day. Subscribers can update themselves by making a phone call. They can transfer any amount of deposit to other accounts irrespective of location either from home or office.

g)     SWIFT 

SWIFT is a bank owned non-profit co-operative based in Belgium servicing the financial community worldwide. It ensures secure messaging having a global reach of 6,495 Bank and Financial Institutions in 178 countries, 24 hours a day. SWIFT global network carries an average 4 million message daily and estimated average value of payment messages is USD 2 trillion. SWIFT is a highly secured messaging network enables Bank to send and receive Fund Transfer, L/C related and other free format messages to and from any Bank active in the network. Having SWIFT facility, Bank will be able to serve its customers more profitable by providing L/C, Payment and other messages efficiently and with utmost security. Especially it will be of great help for our clients dealing with Imports, Exports and Remittances etc.

h)     Easy Pay Machine

It is a mechanical device which can accepted utilities bill like land phone bills, cell phone bills, Gas bills, WASA-DESA bills etc. The day after tomorrow bank will report to the particular authority to give acknowledgement on behalf of their customer.

i)       Others

There are some other electronic services like Mobile Banking; SMS Banking through cellular phone, Mail Banking etc is practicing ignorable way. But Bank are trying hard to develop new products which can be done through electronic device like internet, telephone including cellular and mechanical devices.

II. Some common features of online banking:

1.  24- hours cash deposit & withdrawal facility

2.  Quick cash withdrawal without having queue

3.  Account activities enquiry in any moment

4.  Statement request through ATM/Debit/Credit Card

5.  Transfer own funds to other account number in same bank

6.  Present Balance enquiry

7.  More than16-hours shopping facilities

8.  Deposit or Mail cash or cheque(s) (Cross cheque) through mechanical device.

9.  Changing Personal Identity Number

10. Cash deposit which will originally deposit very next day of deposit that means do not need to go to the branch for every occasion.

11. Mini statement which contain 8-10 previous transaction records

12. Able to pay utilities bill

13. Withdraw money by using VISA, PLUS, MASTER, MAESTRO and other credit card

14. Withdraw money from dollar account which gives taka by converting foreign Currency.

Literature Review

Online Banking is transforming the financial services industry through various innovations. The quantity of cross-border trading and other financial activities is increasing geometrically make possible by technology. It has been made possible by technology, particularly information technology to generate, collect and process information about bank operation and bank customers efficiently and effectively. It provides the ability to create more effective systems of controls in individual institutions and in the market themselves. Compared to the paper based operation, Online banking Systems, in its most proficient form, offer instant verification and transfer and reduces the flow of costly paper in the record keeping process. Application of technology in banking offers opportunity for reduction of both paper and people. Bank have developed OBS for three main reasons.

• To protect and increase market share
• To reduce operating cost by substituting physical capital and technology for labor
• To generate new revenue

Online banking allow Bank to expand their markets for traditional deposit taking and credit extension activities, and to  offer new products and services or strengthen their competitive position in offering existing payment services. In addition, Online banking could reduce operating costs for Bank. More broadly, the continued development of Online banking and online money may contribute to improving the efficiency of the banking and payment system and to reducing the cost of retail transactions nationally and internationally. Although many financial instrument and systems are now considered as “Online banking” came into the terminology of the financial world in the late 1980s, with the possibility of emergence of true online money. All sorts of back-office information management technology and financial services using online devices can be included into the term “Online banking”. The development in information technology has contributed positively to economic growth through several channels.  ICT has led to a productivity growth through the impact on activity processes. Bank have been increasing their own size and financial strength and expanding the scope of their products lines to meet the growing demand of on-line real-time financial services. (Shamsuddoha 2005).

The study on E-Banking: Evolution, Status and Prospects, was aimed to understand the issue of E-banking and its evolution and the effective way of implementing Online Banking in Bangladesh. This dealt with unearthing the opportunities of the banking sector in reaping the benefits by implementing online banking. The study was exploratory in nature and was conducted within Dhaka City having the branches with in Dhaka as the samples. The study revealed the benefits of internet penetration, adaptation to the new technological development and scope of the Bank in Bangladesh to deal with these (Miah, Rahman and Uddin 2007).

Another paper outlined the key online banking trends and events. Further, the research focused on the issues that are related to online banking and provide strategy and directions for the development of online banking. The goal of this paper was to examine the development and prospects of online banking, which found that lack of infrastructure is the major issue for online banking (Siaw, Irene,Yu, and Alec 2004).

Other Papers tried to highlight the importance of Online Banking and resulting customer satisfaction with the problems that may arise due to adaptation to Online Banking. The data for those papers have been collected from both primary and secondary sources of information. Primary data have been collected from the different Bank of Dhaka City, Bangladesh through questionnaire and secondary data have been collected from various published materials and Internet sources 2007 (Ali, Ahmed, Rahman and Azam 2007).

Banking is a financial service industry and any banking decision must be viable in terms of cost-benefit aspects and attracting new customers. Since the market is increasingly covered with financially literate customers, it has been difficult for traditional Bank to maintain their old standard (Howcroft & Durkin, 2000). Technological benefit is paying much because it provides the low cost creation and re-creation of financial services and it sets the upper scale for distribution of financial services to the customer against a speedy return of customer satisfaction (Howcroft & Durkin, 2003). Since banking is a both way game satisfaction is only possible when there is a better relationship existing between parties; the bankers and the customers coupled with efficiency in the provision of services.

I. The View on online Banking 

The vast majority of the recent literature on electronic money and banking suffers from a narrow focus. It generally ignores online banking entirely and equates electronic money with the substitution of currency through electronic gadget such as smart cards and virtual currency.  For example, Freedman (2000) proposes that online banking and electronic money consist of three devices; access devices, stored value cards, and network money. Online banking is simply the use of new access devices and is therefore ignored. Electronic money then is the sum of stored value (smart) cards and network money (value stored on computer hard drives). What is most fascinating and revealing about this apparently popular view is that online banking and electronic money are no longer functions or processes, but devices.

Within this rather narrow scope for online banking and electronic money, there are nonetheless many research that address one or more of the challenges facing it. Santomero and Seater (1996), Prinz (1999), and Shy and Tarkka (2002), and many others present models that identify conditions under which alternative electronic payments substitute for currency. Most of these models indicate that there is at least the possibility for electronic substitutes for currency to emerge and flourish on a large scale, depending on the characteristic of the various technologies as well as the characteristics of the potential users.

Berentsen (1998) considers the impact that the substitution of smart cards for currency will have on monetary policy, arguing that although electronic substitutes for currency will become widespread, monetary policy will continue to work as before because this currency substitution will leave the demand for central Bank reserves largely intact.

Goodhart (2000) discusses how monetary control would work in an economy in which Central Bank currency has been partially or completely replaced by electronic substitutes.  Cohen (2001) distinguishes between monetary control and monetary autonomy, where monetary control is the ability of the Central Bank to control monetary aggregates demand and the supply of money, while monetary autonomy is the ability of the Central Bank to influence output and prices. Cohen argues that the introduction of electronic currency substitutes will not reduce monetary control, but may reduce monetary autonomy, in other hand; Kobrin (1997) argues that electronic currency substitutes are part of a general process of technological advance and globalization that are rendering national authorities of all kinds impotent and obsolete.

Friedman (1999) point out that online banking presents the possibility that an entire alternative payment system, not under the control of the Central Bank of Bangladesh may arise. In an extreme variant of Friedman, King (1999) argues that today computers make it at least possible to bypass the payment system altogether, instead using direct bilateral clearing and settlement; the responses to Friedman. Woodford (2000) argue that the Central  Bank will either continue to provide the payment system of choice, or will find alternative ways to conduct monetary policy through stabilization of short-term interest rates regardless of what form of money is being used.

Although this second set of research introduces some critical issues, it is too vague about what exactly is meant by electronic money and banking. Part of the vagueness stems from the focus of these papers on  the payment system rather than on the payment media. Nonetheless, a complete view of electronic money and banking should include both the payment system and the media used in the system. The feasibility of an alternative payment, after all is intimately tied to the feasibility and desirability of the media flowing through that system.

Buffam (2000) depicted that companies that build the better e-business  solutions will outperform their competitors. Companies that build the very best e-business solutions will transform themselves into zero-latency enterprises. Companies that choose not to embrace e-business, or do so ineffectively, will underperform or be driven out of business.

Turban et al. (2000) argued that following points of managerial issues are very important: Focus of Electronic commerce management; Sales promotion; Purchase process reengineering; Just-in –Time delivery; New electronic intermediary business; Provision of solutions; Business ethics.

Rahman (2001-2002) observed that issues relating to electronic fund transfer require security, availability, authenticity, non-repudiability and audibility. He suggested for appropriate control and efficient security measures and also for proper utilization of audit trail in the e-commerce system.

Ali (2003) argued that Bangladeshi companies, organizations have several problems to start full swing e-business. These include limited resources, backwardness in technology, managerial inefficiency, socio-infrastructural problem such as corruption, default culture law and order situation, rampant corruption, strike etc. which penetrate for long time.

Ali, Mohsin,  and Yasmeen ( 2004) observed that  maximize e-business efforts to focus on information dissemination, knowledge transfer, and technical assistance are required .Steps need to create appropriate knowledge among various procedures of e-business.

Huda, Momen and Ahmed (2004) commented that the banking sector in Bangladesh is clearly recognizing the importance of information technology to their continued success.

Hoq, Kamal and Chowdhury (2005) argued that a key reason why e-commerce, especially the business-to-business segment, is growing so quickly is its significant impact on costs associated with inventories, sales execution, procurement, intangibles like banking, and distribution costs. If these reductions become pervasive, e-commerce has the potential to be the application that ushers in the large productivity gains. Achieving these gains is therefore contingent on a number of factors, including access to e-commerce systems and the needed skills. However, what is unique about ecommerce over the Internet and the efficiency gains is that it promises the premium placed on openness. To reap the potential cost savings fully, firms must be willing to open up their internal systems to suppliers and customers. This raises policy issues concerning security and potential anti competitive effects as firms integrate their operations more closely.

Uddin and Islam (2005) observed that the multifarious projections of ICT in human life plead a wining case for institutional integration of ICT related components in rural support programs taken by Governments and NGOs.

Chaffey (2006) dealt with strategy and applications of E-Business and E-Commerce in a logical but robust manner.  He stressed that e-business and e-commerce is very important for management implications as such a bridge to link leading edge research and professional practice is required.

Mia, Rahman and Debnath (2007) observed that the latest development in marketing financial services by Bank is online banking, where Bank have now put themselves in the World Wide Web to take advantage of the Internet’s power and access to cope with the accelerating pace of change of business environment.

Pires and Stanton (2007) commented that policy wise government must recognize that the ability of countries to engage in e-commerce is tied both directly and indirectly to their attractiveness for FDI.

Ahmed and Islam (2008) observed that adopting e-banking services, Bank in developing countries are faced with strategic options between the choice of delivery channels and the level of sophistication of services provided by these delivery channels.

Chandrasekhar and Sonar (2008) depicted that Bank will reap the benefits of IT truly and totally, if and only if they pay adequate attention to technological progress as well as efficiencies on the input and output sides.

Shamsuddoha (2008) argued that in Bangladesh, banking industry is mature to a great extent than earlier period. It has developed superb image in their various activities including online banking. Now modern banking services have launched by some multinationals and new local private commercial Bank. Online banking is one of the most demanded and latest technologies in banking sector.

Ahshan (2009) agued that online transaction would boost the gross domestic product (GDP) growth and thus help Bangladesh achieve the Millennium Development Goals (MDGs). In the era of globalisation, the Internet makes the world smaller and e-commerce facilitates marketing and shopping from home. E-commerce facilitates business with customers over the internet. In e-commerce, customers can buy goods and services over the Internet.

Islam and Yang (2009) observed that service quality satisfaction and informational trust had important mediating effects on the Balance score card performance process. These two mediating roles explain that, when an institution creates and raises the levels of service quality satisfaction and informational rust, the results lead to a favorable customer interaction relationship and thus could help the institution achieve higher levels for Balance score card performance measure.

Nyangosi, Arora, Singh (2009) argued that banking through electronic channels has gained increasing popularity in recent years. This system, popularly known as ‘e-banking’, provides alternatives for faster delivery of banking services to a wide range of customers.  The overall result indicates that customers in India and Kenya have developed positive attitudes and they attach much importance to the emergence of e-banking.

Shah and Clarke (2009) focused on human, operational, managerial, and strategic organizational issues in e-banking. They argued that e-banking management can help to expedite doing business through using electronic medium.

Rahman (2010) who is the Governor of Bangladesh Bank argued that Bangladesh Bank has achieved a historic milestone in the trade and business arena ,departing from conventional banking with the introduction of e-commerce recently; a giant stride towards digital Bangladesh .

From the aforesaid literature review, it is evident that on line banking can act as a complementary towards e-business. With the help of e-business the country can

create opportunities as this will help both producers and customers. But these theoretical observations may not be feasible in this country .As such the study seeks to evaluate whether the country has proper infrastructure for doing e-business? What are the statuses of e-business and on line banking of the country? Does on line banking really works as a complementary to e-business in Bangladesh? Aforesaid questions arises which the study intends to examine.

II. Online banking and the Common Banking Products   

The use of information technology in banking operations is called online banking Ovia 2001 argue that Online banking is a product of e-commerce in the field of banking and financial services. In what can be describe as Business-to-consumer (B2C) domain for balance enquiry, request for  cheque books, recording stop payment instruction, balance transfer instruction, account opening and other forms of traditional banking services. Bank are also offering payment services on behalf of their customer who shop in different e-shops.

III. Telephone and PC Banking Products

This is a facility that enables customers, via telephone calls, find out about their position, with their bankers merely dialing the telephone numbers given to them by the Bank. In addition, the computers on the phone would require special codes given to the customers as a means of identification of authentic users before they can receive any information they requested for.  This is a service introduced into the banking balance as a result of computer telephone technology being made available Ovia (2001). The technology banking has a universe of possible application limited only by the imagination. These areas include: Account balance enquiry; Account statement printing; intra-Bank Account to Account Transfer; inter-Bank Account to Account ransfer; Download Account Transaction etc. Telephone and PC banking brings the bank to the doorstep of the customer, it does not require the customer to have his premises; interactive Voice Response becomes a regular feature of operations; Text-to-speech capability becomes reality; A uniformed messaging capability  become permanent feature of the bank.

IV. The Card System

The card system is a unique electronic payment type. The smart cards are plastic devices with embedded integrated circuit being used for settlement of financial obligations. The power of cards lies in their sophistication and acceptability to tore and manipulate data, and handles multiple applications on one card securely  (Amedu, 2005). Depending on the sophistication, it can be used as a Credit Card, Debit Card and ATMs (Automatic Teller Machine).

It is electronically loaded with cash value and carried about like credit card and stores information on a microchip. The microchip contains a “purse” in which value is hold electronically. In addition, it also contains security programs; these protect transactions between one card user and the other.

It can also be transferred directly to a retailer, merchant or other outlet to pay or goods and services, and like cash, transaction between individual without the needs for Bank of the other third parties. Also, the system does not require central clearing. It is valued immediately. Also the system allows transfer of one value to the other hence it operates like cash.

V. The Automated Teller Machine (ATM)

Worldwide, the use of paper cash still remains the most widely used and acceptable means of settling financial transactions and obligations. However, the proportion of cash transactions is increasingly on the decline, especially in advanced economics (Amedu, 2005). In USA, where the use of cash is  still prominent, compared with European countries, it represents 50 percent or more of the total transactions. Of course, cash is a non-electronic payment method. However, the physical carriage of cash as well as the visit to the bank branches is being reduced by the introduction of an electronic device, ATM.

An ATM device allows a bank customer to withdraw cash from his account via a cash dispenser (Machine), and the account is debited immediately. A fundamental advantage is that it needs not to be located within the banking premises. It is usually in stores, shopping malls, fuel stations etc.

VI. Cheque

A cheque is a paper based payment instrument whose usages are still gaining ascendancy. The Automation focus on this instrument is to reduce the number of clearing days and improve on security arrangement in the course of settlement and collection.

VII. Threats of online banking

Threats make transaction processing via online banking prone to error; the absence of a clearly defined legal frame-work for online banking, leaving Bank with inadequate legal cover to provide the services; and poor telecommunication infrastructure all over the country. In addition, the fact that internet assuage in the country has been abused by cyber-criminals makes its window unattractive for domestic banking operations and legitimate international operations. The inherent fear associated with patronizing online banking services in Bangladesh is again re-enforced by the growing evidences that the world over, dubious Bangladesh use fake websites to scoop funds from unsuspecting

 I.            Online Banking Profitability and Efficiency 

Commercial Bank assaulted by the pressure of globalization, competition from non-banking news ways to add value to the services. The question “what drives performance?” is at the top in understanding superior performance and hence triving for it. Substantial research efforts have gone into addressing this question, starting from the strategic level and going down to operational details. A key study bench marking the strategies of leading retail Bank and retail Bank was carried out by the bank strategies of leading retail Bank and (Vander Velde 1992). This study is based on the opinions of heads of retail Bank at all us commercial Bank established the linkage between marketing, operations, organizing excellence. This finding led to the formulation of the service management strategy encapsulated in the trail operational capabilities service quality-performance (-SQ-P) (Foth and Jackson 1995). The C- SQ-P trail is, in turn, a focused view of the service profit chain described by (Heskettet all, 1994) based on their analysis of successful service organizations.

   II.            Bank Customer Relationship

Bank customer relationship, is just a special contract where a person entrusts valuable items with another person with an intention  that such items shall be retrieved on demand from the keeper by the person who so entrust.

Thus the banker is the one who is entrusted with above mentioned valuable tems, while the person who entrust the items a view to retrieving it on demand is called the customer. The relationship is based on contract. It is based on certain terms and conditions. or instance, the customer has the right to collect his deposit on demand personally or by proxy. The banker too is under obligation to pay, so long the proxy is duly authorized by the customer.

The relationship is also fiducially. The terms and conditions governing the relationship should not be leaked to a third party, particularly by the banker. Also items kept should not be released to a third party without due authorization by the customer.

III.            Operation of Financial Institution

Financial institutions provide service as intermediaries of the capital and debt markets. They are responsible for transferring funds from investors to companies in need of those funds. Financial institutions facilitate the flow of money through the economy. To do so, saving are pooled to mitigate develop revenue. Should the yield curve become inverse, film, in this arena will offer additional fee-generating  services including securities underwriting, and prime brokerage.

Overview of the organization

I. Brief Overview

International Finance Investment and Commerce Bank Limited (IFIC Bank) is a banking company incorporated in the People’s Republic of Bangladesh with limited liability. It was set up at the instance of the Government in 1976 as a joint venture between the Government of Bangladesh and sponsors in the private sector with the objective of working as a finance company within the country and setting up joint venture Bank/financial institutions abroad. The Government held 49 per cent shares and the rest 51 per cent were held by the sponsors and general public. In 1983 when the Government allowed Bank in the private sector, IFIC was converted into a full-fledged commercial bank. The Government of the People’s Republic of Bangladesh now holds 35% of the share capital of the Bank. Leading industrialists of the country having vast experience in the field of trade and commerce own 34% of the share capital and the rest is held by the general public.

Since the beginning of its journey as a commercial bank in 1983, IFIC Bank has been giving great emphasis on the adoption of modern technology. It became the pioneer in the field of automation by introducing computerized branch banking right in the same year. Subsequently, all the branches were brought under similar automated platforms with upgraded software applications to offer all the critical banking features. At present all 100 domestic branches are fully computerized under networked environment.

The Bank has taken up a new project with Misys International Banking System Inc. (UK) to further upgrade its banking operation to state-of-art world class on-line banking solutions to provide faster and even more convenient centralized services to the clients. This study will reveal the competitiveness of IFIC Bank Ltd in the provision of services using ICT.

II. Mission Statement

The bank’s mission is to provide service to the bank’s clients with the help of a skilled and dedicated workforce whose creative talents, innovative actions and competitive edge make the bank’s position unique in giving quality service to all institutions and individuals that we care for. We are committed to the welfare and economic prosperity of the people and the community, for we derive from them the bank’s inspiration and drive for onward progress to prosperity. We want to be the leader among Bank in Bangladesh and make the bank’s indelible mark as an active partner in regional banking operating beyond the national boundary. In an intensely competitive and complex financial and business environment, we particularly focus on growth and profitability of all concerned.

III. Board of Directors

There are thirteen members of the Board of Directors who are responsible for the strategic planning and overall policy guidelines of the Bank. The bank has the following directors:

01.

Mr. Salman F Rahman

Honourable Chairman

02.

Mr. Mohammad Lutfar Rahman

Honourable Director

04.

Mr. Aminur Rahman

Honourable Director

03.

Mr. Abu Tahir Mohammad Golam Maruf

Honourable Director

05.

Mr. Syed Anisul Huq

Honourable Director

06.

Mr. Mohammed Nayem Syed

Honourable Director

08.

Mr. Monirul Islam

Honourable Director

07.

Mr. Anwaruzzaman Chowdhury

Honourable Director

09.

Mr. Tanim Noman Sattar

Honourable Independent Director

10.

Mr. Mahmudul Huq Bhuiyan

Honourable Director

12.

Mr. Syed Monjurul Islam

Honourable Director

11.

Mr. Arastoo Khan

Honourable Director

13.

Mr. Mohammad Ali Khan, ndc.

Honourable Director

14.

Mr. Mohammad Abdullah

Managing Director

Besides, there is an Audit Committee in the Board to oversee compliance of major regulatory and operational issues. The CEO and Managing Director, Deputy Managing Director and Head of Divisions are responsible for achieving business goals and overseeing the day to day operation. The CEO and Managing Director is assisted by a Senior Management Group consisting of Deputy Managing Director and Head of Divisions who supervise operation of various Divisions centrally and co-ordinates operation of branches. Key issues are managed by a Management Committee headed by the CEO and Managing Director. This facilitates rapid decisions. There is an Asset Liability Committee comprising member of the Senior Executives headed by CEO and Managing Director to look into all operational functions and Risk Management of the Bank.

IV. Management Committee

The chart of the management committee of IFIC Bank Ltd is given below:

Analysis and discussions

Information  technology  (IT)  revolution  has  made  steady in roads into the banking institutions and has brought about a significant change in many aspects in the form of computerization of transactions and new delivery channels such as Internet  Banking,  Phone  Banking,  ATMs,  EFT,  ECS  and  EDI  etc.  With migration of traditional paper-based funds movements to quicker and more efficient online mode, funds transfers have become easy and efficient to perform.  This study covers the transformation stage of IFIC bank ltd from manual/traditional bank to online bank and how effective it has been through out this period in terms of provision of services and earning larger profits.

A study was conducted consisting of questionnaires to 35 respondents. The responses of customers on the impact of IT were measured on a 5-point Likert-type rating scale. Arithmetic mean and standard deviation of the local and global impact criteria were calculated to determine their levels. These are shown in the following tables and then the results were discussed.

Table: 1 Induced impact of online banking on local criteria

Table:2 Induced impact of online banking on global criteria

Table 3: Effects of the adoption of online banking on customer services

Table:4 Attitude of customers towards the adoption of online banking services

Tables 1 and 2 show the impact of local and global criteria on the adoption of ICT products in the banking industry. The criteria used for the local impact are time saving, error rate reduction, management decisions and speed of transaction while those considered for global impact are competitive strength, market segmentation, improved revenue, proper forecasting and modernisation. Respondents believe that ICT impacts positively on all the criteria. The calculated mean of 4.97 on the likert scale,  reduces error (4.54), speeds which is close to 5 also supports that it saves time. It also speeds up transaction (4.54) and assists management to take quality decisions (4.54). Similarly, it improves competitive strength (4.86), enhances proper market segmentation (4.24), improves revenue (4.18), and ensures modernisation (4.69) and proper forecasting (4.30).

The positive impact of ICT on the global criteria, especially improved revenue corroborates the findings Laudon, and Laudon, (1991) who studied the entire cash flow of most fortune 500 companies and linked their success to Information System. They concluded that Information Technology directly affects how managers decide, how they plan and what products and services are produced.

Some factors identified to show the effects of ICT products on customer services are shown in Tables 3 and 4. These factors include facilitation of accurate records, enhancement of convenient business hour, facilitation of prompt and fair attention, enhancement of faster services and availability of Home and Office Banking services.  About 46 of the customers strongly agreed and 45 agreed that the adoption of ICT products in banking facilitates accurate records. The mean of 4.34 on the likert scale also supports this view. Similarly, the selected customers believed that the adoption enhanced convenient business hour, facilitates prompt and fair attention, enhances faster services, and makes Home and Office Banking available to customers. The result of the interview conducted for the customers also showed their positive response towards the adoption of ICT. Customers were happy with great improvement on statement generation, accounts reconciliation and balance enquiry making. Manual recording system through the use of ledger, cash books have been replaced by computerized information system making. Manual recording system through the use of ledger, cash books have been replaced by computerized information system.

Adoption of ICT has influenced the content and quality of banking operations. From all indications, ICT presents great potential for business process reengineering of the bank. Investment in information and communication technology should form an important component in the overall strategy of banking operators to ensure effective performance. It is imperative for bank management to intensify investment in ICT products to facilitate speed, convenience, and accurate services, or otherwise lose out to their competitors. The bank presents ICT providers with great opportunity to market their innovations. Success in this area however depends on how they can customise their services to appeal to the ready minds of various stake holders in the industry.

The following table shows the financial highlights of IFIC bank ltd for 5 years 2006 – 2010. These data were collected form the annual report of the bank and these data were used to analyse the growth of the performance of the bank for 5 years period.

From the above financial highlights of the bank the following graphs can be drawn to reflect a clearer picture and to help in the evaluation of the bank’s performance for the period.

The graph above indicates that from the year 2006 till 2010 the bank is able to attract large number of customers through greater product offering and faster and efficient services. From table 1,2,3 & 4 we can also see that the customers are more satisfied by the quality of product and services of IFIC bank ltd, that shows online banking enabled the bank to increase its market share over the years and still going on with the trend.

In the above diagram the years 2006, 2007 & 2008 show the trend of deposits and loans and advances before implementation of online banking operations. IFIC bank ltd became real time online during early 2009. The bar diagram clearly shows the rise deposits and advances after the bank became fully online. The deposits rose to more than Tk 54,000.00 million compared to Tk 36,000.00 million in 2008. The loans and advances grew to more than Tk. 47,000.00 million in 2010 compared to Tk. 33,000.00 million in 2008. This shows that bank was able encourage existing as well prospective clients to consume the services of the bank more due to efficient and effective provisions of services thanks to online banking operations.

This rise in loans and advances enabled the bank to generate high income in terms of interest, commission and other service charges. Online banking also enabled the bank to reduce its cost of provision of services due to fewer requirements of officers to handle tasks. Moreover, administration expenses reduced over time due to centralized monitoring and supervision system as the data can be gathered through central server of the bank. Timing of provisions of services has improved which again ensured rising consumer satisfaction and hence greater revenues.  The reduction of cost of provision of services and rising income enabled the bank to earn greater net income and hence profit after tax and provision shows a rising trend as shown by the following figure.

Here from the diagram we can see that the profit after tax grew from 2006 to 2007, and then there was a certain fall from 2007 to 2008. The line then kept on rising from 2008 onwards and it rose sharply from 2009 to 2010. This signifies that online banking operations have had quite an impact on the income of IFIC bank ltd due to which we can see a sharp rise in the profits after tax after the implementation of online banking operations.

Cost of fund shows a fall from 2007 onwards but the fall was greater from the year 2009 and 2010. This is due the fact that online banking operations reduced the cost of administration greatly.

Summary of the major findings

The study was carried out in order to assess the impact of online banking system in IFIC bank ltd. The general introductory aspect shade more light on the essential of online banking. There are many literature and academic publication from different authors in online banking, product emerging issues in online banking. The prospect of online banking was looked into critically. Online banking improved the fortune of IFIC bank ltd. This was achieved by adopting the Bangladesh Bank ICT guidelines.

Online banking constitutes a radical service innovation in  the financial sector: the “radical” characteristic of such an innovation lies in its potential for changing the technological, organisational and market context in which Bank operate. They face the opportunity to enormously increase the value of the services they offer to the end users, while, at the same time, gaining long-term efficiency in terms of economies of scale and scope. The main issue for bank is to understand the real value of the innovation, which is not a substitute of the existing structure, but represents a means of increasing its flexibility and, at the same time, a way of widening and customising the range of services provided on the market.

Summary of the major findings from the study can be outlined below:

1. There exists very high influence of online banking on time saving.
2. There is a great influence of online banking on error rate reduction.
3. Management decisions are greatly influenced by online banking operations.
4. Online banking has enabled to speed up the transactions.
5. Online banking has enabled the bank to earn greater market share in terms of the number customers.
6. Online banking operations have made it possible for the bank to earn greater revenues through greater efficiency and cost effective services.
7. Online banking operations have helped the bank to access international market more easily.
8. One of the major findings of the study has been the ability of the bank to reduce the cost of fund drastically and improve profits.

Identification of the problem

In every research undertaken there are inherent limitations that cannot be avoided. This research too faced some such limitations. These include improper time management, high cost of research, the difficulty in obtaining information as required and the unpredictable nature of data collection, i.e. data collected in any form.

Information is not easy to obtain. It is expensive to obtain as most sources are usually reluctant to disclose it. Other limitations may or may not occur depending on uncertain circumstances of sampling and non-sampling-errors. These include the extent to which respondents cooperate, support the researcher and express honesty and truthfulness in the data they provide. In some instances it was noted that the interviewees and respondents to the questionnaires did not accurately respond due to lack of enthusiasm or also due to skepticism. This limitation was reduced by discarding the responses which were considered inaccurate based on instinct and fresh respondents were chosen to fill the emptied spaces in the sample.

Problems  were  incurred  when  designing  the  questionnaire  in  order  to  determine  what  design  would  be  clear  and understandable by the customer as well as highly accurate and precise. Though open-ended question allow respondents to accurately state their feelings they are difficult to analyse. On the other hand close-ended questions are easy to analyse but they may not cover the full range of the respondents’ choice and the respondent may hence pick a choice he/she does not really accept.

 This limitation was overcome by designing a questionnaire with a combination of both open-ended and close-ended questions to obtain accurate responses from customers. The open-ended questions were used to boost the close-ended questions by supporting and substantiating them.

As online banking is so broad and the online banking services covered in this research are so broad and not specific it is possible that a customer’s dissatisfaction maybe due to a certain part of e-banking and not the whole of it. For instance a customer may  be  satisfied  with  ATM  services  provided  by  a  bank  but  not the tele-banking  services.  This  limitation  is overcome by looking at each particular case.

Another major limitation of this research was the inadequacy of knowledge that most bank customers had about e-banking especially regarding the online banking and tele-banking delivery channels. It was observed that the people who are not aware of tele-banking or online banking intricately or even remotely intricately perceived the delivery channel to be not important. This is misleading since the respondent does not have enough knowledge on the subject matter at hand to be able to judge accurately.

All research make some assumptions at some stages in order to proceed further. However, not all assumptions made may be right and hence this is another limitation as the incorrect assumptions may lead to testing of hypotheses on the wrong footing and hence incorrect recommendations and conclusions.

Also, competition and changes in lifestyle and technologies have changed the face of banking. With the traditional branch based  business  on  the  decline,  bank  is  now  seeking  alternative  ways  to  provide  and  differentiate  their  services. Customers, both corporate and retail, are no longer willing to queue in Bank, or wait on phones, for the most basic of services. They demand and expect to be able to transact their financial dealings where and when they wish. With the number of businesses and home computers increasing every year, the electronic delivery of banking services is becoming the ideal way for bank to meet their clients’ expectations. Initially provided by only the larger Bank to their corporate clients, every bank realizes that the ability to provide online banking services is essential to its survival.

The focus of the study is mainly based on Dhaka based some selected Bank in Bangladesh. E-banking was the important  issue  in  world  but  Bangladesh  is  developing country with the limited infrastructure facility and limited skill  manpower.  Computer  literacy  was  found  very  few and  information  technology  was  in  the  infant  position.

The study was based on limited  variable.  Difficulties were faced to collect the desire information.  Disclosing the information was very restricted. IT division was not cooperative all the time. In addition, interviewing target  respondents  adopted convenience sampling as alternative to random sampling, at some phases where respondents were inaccessible or not available. Bank officials were found too busy and also reluctant to talk without a proper written permission from the competent authority.

Although  e-banking  has  bright  prospects,  it  involved some financial risks as well. The major risk of e-banking included  operational  risks  (e.g.  security  risks,  system

design,  implementation  and  maintenance  risks); customer  misuse  of  products  and  services  risks;  legal risks (e.g. without proper legal support, money laundering may be influenced); strategic risks; reputation risks (e.g. in case the bank fails to provide secure and trouble free e-banking services, this will cause reputation risk); credit risks; market risks; and liquidity risks.

Recommendations

 Differentiation through service and convenience, not just price, is the surest road to profitability. Such differentiation requires both, offline and  an  online  presence.  Thus,  Bank  should  offer  the  best  mix  of  online  and  offline  conveniences,  plus competitive rates and deliver it all at a price the bank can afford. This will help Bank go a step forward to improve their service and thus gain competitive advantage by retaining and attracting their customers. It must be noted that for virtual Bank, higher rates are not just an added benefit for customers; they are the fundamental differentiating factor used to attract deposits. Without the high rates, there would be no compelling reason for a customer to choose a virtual bank over a physical bank with online banking services. Analysis shows that by focusing on rates as their key advantage over the competition, virtual Bank trap themselves into paying more for deposits. They have to continue paying high rates or they risk losing their clientele – the clientele who tend to be more price-sensitive, as they were attracted by the higher rates in the first place.

Traditional bank branches should take advantage of this weakness apparent in virtual Bank by offering clients higher rates if it is conducive to do so bringing virtual Bank to the edge. This again will improve the bank’s position. Since growth alone will not solve the problems of virtual Bank. Virtual Bank cannot eliminate the vulnerabilities of their business model simply by achieving economies of scale, or creating online loan origination systems. Thus it is recommended that virtual Bank must create  new  ways  of  differentiating  their  products  through  service  and  convenience.

Creating  compelling  services  and conveniences will require some offline presence like kiosk-like “micro-branches’, or the right number of strategically located brick and mortar branches serving a larger number of customers per branch than traditional competitors.Virtual Bank’ high non-interest expenses can be attributed to their scale-tipping marketing costs.

Virtual Bank have comparatively higher advertising costs not only because they are new, but because they lack branches. Physical presence has marketing value, in that it helps establish a recognizable brand, and can promote an image of convenience and trust. Virtual Bank have to spend more on advertising because they lack the marketing value that physical presence brings. Thus, eliminating a physical infrastructure may have the effect of shifting some costs rather than cutting them.I feel that virtual Bank’ business model will only take hold after virtual Bank gather enough customers to gain economies of scale, and have established their brand enough  to  cut  their  marketing  budgets.  Though,  I  feel  that  even  a  significant  drop  in  non-interest  expenses  including marketing, would not be enough to pull virtual Bank ahead of their offline competitors. My suggestions to improve e-banking include offering a wider range of financial services and products, building physical branches or kiosks are ways to differentiate and improve the value proposition for customers who might otherwise demand better rates.  Brick and mortar facilities also provide shelter against loan rate competition, by creating an opportunity for loan officers to build relationships built on service, not just rates. Also, a physical presence boosts marketing efforts.

I recommend that Bank must pay attention to these questions that customers must be concerned about regarding online banking:- can the bank offer a wide range of products and services over the web?- can the customer effect funds transfer between accounts?- is it secure to transact over the Web?- can the customer get access to other websites such as shopping malls through the bank? Also, in total I would recommend the selected Bank in IFIC Bank ltd. to pay more attention to developing internet and tele-banking services as they are not yet thoroughly developed and thus, they can be exploited to the benefit of the bank. Bank should try and publicise the e-banking services it provides through advertisements, publications, though its website, by means of pamphlets/brochures and encouraging bank employees to talk about it with the customers. Also, attention should be paid to different types of customers such as young and old customers, risk-takers and skeptical customers, regular and irregular customers. Bank should conduct researches to obtain information on how best to deal with the different types of customers it serves.

In order to give the growing trends of Information and Communication Technology (ICT) which involves net banking and e-commerce in banks a vision in the right directions, the following strategies are recommended for further follow up:

1. The banks must be focused in terms of their needs and using the right technology to achieve goals, rather, than acquiring technology of internet banking because other banks have it.

2.  Government participation in ensuring focused telecommunication industry must be visible to reduce or remove avoidable costs of implementing e-commerce and internet banking.

3. Bangladesh Bank ICT department must stipulate standards for the bank to follow to avoid making Banking Sector a dumping ground for the outdated technological infrastructures.

4.  Training and Manpower development is another major problem militating against

the growth of e-commerce in the country. Government must make right IT policy by ensuring that Computer, Communication equipments and other IT infrastructures to a large extent are manufactures in the country so that our people can acquire first hand necessary skills. Government Policy that will guide against Money laundering, fraud and Security risks posed by net banking is inevitable.

5.  To counter the legal threat and security posed to net banking and e-commerce, the necessary legal codes backing the industry must be established; this will enhance the growth of the industry.

Conclusion

 In this age of information technology and competitive world, banking sectors should be modernized. In order to keep pace with the changing world we have to replace our traditional banking systems by online banking systems. It has been found that local private and state-owned Bank are not doing well as compared to foreign Bank.  Foreign Bank are using new technology and they are earning more. The banking sectors of our country should use online banking system so that they can provide more services to their customers and earn s sustainable amount of money to support the national economy.

On the view of the above analysis and findings the objectives of the report have been achieved. The following points will clarify the standings:

 a.      Appropriate utilization of the online banking facilities has proved to be fruitful for the bank as it has resulted in better cost effective service. Again, constant innovation and development of products and services of the bank will enable it to further enhance the service quality and bring profitable business prospects in the future.

b.      The analysis done in the chapter 5 gives a clear picture that online banking services brought about major changes in the improvement of services and efficiency as clients prefer time saving, reduction of error rate, quicker management decisions, speedy transactions and faster services. Majority of the respondents agreed that online banking operations have inflicted the changes in the bank and now the bank is one of the major competitive banks in Bangladesh.

c.      The discussion in chapter 5 shades lights on the profitability of the bank. The discussion shows that due to better provision of cost effective services, major clients of the bank express satisfaction over the services and products of bank and thus are more willing to cross purchase the products and offerings of the bank. This has enabled the bank to increase the profits.

d.      As the bank goes from strength to strength, the market share has gradually developed and it is now one of the major market players in terms of innovation and developments.

From the analysis, discussions and evaluation from the above findings it can therefore be deduced that the objectives of the report have been fulfilled. All the objectives are achieved. I would thus conclude that bank should drown itself in all the intricacies regarding online banking to determine ways that will affect the customers in Bangladesh and use it to its maximum benefit. At last but not the least is that the Bank must adapt to the electronics age. Consumers demand it. Economics drives it. The Bank must exploit it.