[e-banking in pakistan] eps

[E-BANKING IN PAKISTAN] Internet Banking & EPS

Acknowledgement

August 9, 2009

Well we, when writing this acknowledgement would like to acknowledge first to Allah.

My second acknowledgement would go to our parents for their hospitality and patience.

We would like to acknowledge Mr. Saghir Muhammad for giving us an opportunity to do this research and for polishing us manifold. Our utmost regards go to her for guiding us and bearing with us through the semester.

Making this report has immensely helped us in understanding the vitality and importance of internet banking

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Letter of Authorization

August 9, 2009

To: Talha Suhail

Syed Taha Hameeduddin

From: Mr. Saghir Muhammad

Course Instructor

For Summer Semester 2009, you are assigned to prepare a report on the Internet Banking & EPS.

Yours sincerely,

Mr. Saghir Muhammad

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Letter of Transmittal August 9, 2009

Mr. Saghir Muhammad

Course Instructor

Institute of Business Management

Dear Mr. Saghir Muhammad,

We have attached a copy of the report on the Internet Banking & EPS. This report is a summary of our findings from the research we conducted during the summer semester of 2009. We were assigned this report by you in the month of June. We are pleased to report that we have completed the project on schedule.

If you have any questions and/or comments regarding the interpretation of this report please feel free to contact me at the email address. I thank you for giving us the opportunity to work on such an informative and interesting research project.

Sincerely,

__________________ ______________________

Talha Suhail S. Taha Hameeduddin

[email protected] [email protected]

0321-3893608 0321-2080126

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mailto:[email protected]


Executive Summary

This report is based on the research conducted regarding the internet banking in Pakistan.

Following the overview of the Internet Banking in Pakistan, we have included the literature review that helped us fill the gaps of our research. Next we have defined our purpose, problem statement, research objectives, and scope.

We have used questionnaires and focus group to collect our data. The questionnaire was formulated in such a way that it caters to all our hypotheses.

The later part of the report includes the findings we observed from our results and limitations that we faced during our work. We have further given suggestions for the Internet banking in Pakistan in general.

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TABLE OF CONTENTS

S.NO CONTENTS PG NO.

1 Introduction 6

2 Overview of E-Banking in Pakistan 8

3 Literature Review 11

4 Research Problem 15

5 Research Objectives 16

6 Hypothesis 17

7 Research Methodology 18

8 Hypothesis 1 19

9 Online Products and Service by UBL 20

10 Comparison of Banks 24

11 Findings and Conclusion 25

12 Hypothesis 2 26

13 Analysis 29

14 Findings 40

15 Suggestions & Conclusion 42

16 Annexure 44

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Introduction

One of the major forces behind the changes happening to business today is technology, which is creating new products, services market opportunities and developing more information and system oriented business and management processes.

As an information medium, the Internet offers different information services that have been developed over the time. The services are e.g. electronic mail, file transfer protocol, and the worldwide web (www). The internet has no central owner, but the connected networks are owned and administrated by different universities, companies, authorities and other organizations.

Electronic commerce refers to the use of electronic means and technologies to conduct commerce in various settings, such as business-to-business (B2B) and business-to-consumer (B2C). The enabling technologies, of course, are also used for non-commercial activities such as entertainment, communication, filing and paying taxes, managing personal finance, research and education, which may still include the services of online companies. E-commerce is the application of information technology to facilitate business exchanges among different parties.

Banking is one of the most information intensive sectors and is an ideal domain for the successful development of E-Commerce. Internet banking refers to the use of the Internet as a remote delivery channel for banking services .For banks, technology has emerged as a strategic resource for achieving higher efficiency, control of operations, productivity and profitability. For customers, it is the understanding of their anywhere, anytime, anyway banking dream. This has prompted the banks to embrace technology to meet the increasing customer expectation and face the tough competition. Internet banking would help banks present a potentially low cost alternative to brick and mortar branch banking. Internet banking services are crucial for long-term survival of banks in the world of electronic commerce. The market for Internet banking is forecasted to grow sharply in the next few years, affecting the competitive advantage enjoyed by traditional branch banks. Indeed, it also was estimated that financial institutions that failed to respond to the need for Internet banking services would likely lose more than 10% of their customer’s base by the year 2000.

Internet banking involves consumers using the Internet to access their bank account and to undertake banking transactions. At the basic level, Internet banking can mean the setting up of a web page by a bank to give information about its product and services. At an advance level, it involves provision of facilities such as accessing accounts, funds transfer, and buying financial products or services online. This is called “transactional'' online banking.

There are two ways to offer Internet banking. First, an existing bank with physical offices can establish a web site and offer Internet banking in addition to its traditional delivery channels.

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Second, a bank may be established as a branchless, Internet only or virtual bank. Broadly the levels of banking services offered through Internet can be categorized in three types: (i) The Basic Level Services use the banks websites which disseminate information on different products and services offered to customers and members of public in general. It may receive and reply to customers queries through e-mail (ii) In the next level are Simple Transactional Websites which allow customers to submit their instructions, applications for different services, queries on their account balances, etc, but do not permit any fund-based transactions on their accounts (iii) The third level of Internet banking services are offered by Fully Transactional Websites which allow the customers to operate on their accounts for transfer of funds, payment of different bills, subscribing to other products of the bank and to transact purchase and sale of securities, etc. Most of the banks providing Internet banking products and services offer, to a large extent, an identical and standard package of banking services and transactional capabilities.

A website plays very significant and key role in Internet banking. Websites should be able to convey all the information for both current customers and potential new customers via the Internet. If the content of the site fails to pass sufficient information on account capabilities, then the site is not fulfilling its objectives. The bank’s website provides a better way for communication.

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Overview of Internet Banking in Pakistan

Globally banking is no longer confined to the four walls of a branch. Many countries are far ahead of the facilities being available in Pakistan. The initiative in e-Banking in the country was taken a bit late, but now focused efforts are being made to catch up with rest of the world.

The level of low banking, a few years back, was confined to the four walls of branch. With the entry of private banks, having limited number of branches, investment in technology was chosen, as alternative, to overcome this deficiency. The advent and common use of Internet, leading to e-commerce, forced the banks globally to incorporate e-banking. Pakistani banks are still far behind their global counter parts. One such example is complete lack of merchant accounts in Pakistan.

However, lately a task force was established to study and implement formation of Electronic Clearing House (ECH). Simultaneously, the local banks also went for on-line banking, though still not a norm. Another step forward was installation of ATMs by the banks. While some banks have their own ATMs, some other banks started using a dedicated network. In this system an ATM card holder of a particular bank could use teller machines installed by all the sponsors of this network. The system is working to a satisfactory level.

Though efforts are being made to increase the number of on-line branches, it is still a capital intensive proposal. It is getting popular in urban areas, but has not become common in rural areas, mainly due to low literacy level in the country. However, some analysts believe that with the passage of time, confidence in the system and increasing use, traffic to branches in urban areas will go down considerably.

A factor which is the key issue in e-banking is low penetration level of computers in Pakistan. The other factors, not allowing the people who have computers and Internet facility, was lack of services being offered by the banks, legal framework and concerns about the security. A landmark step in this direction is the promulgation of the Electronic Transactions Ordinance 2002. This Ordinance provides legal recognition to digital signatures and documentation reducing the risks associated with the use of electronic medium of business.

One factor prohibiting use of the newly offered services is, its high cost. The banking sector terms this nominal, keeping in view the level of convenience. Saying this, they still believe that cost can go down further with the increased use of these facilities. It is also believed that while

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the use of these facilities is low due to apprehensions about security, clients take refuge behind high cost.

A factor slowing down the process in this area is capital intensive nature of these operations. The investment in technology by the commercial banks is affecting the payout to shareholders as well as the depositors. The banking sector experts term this only a brief phase.

The global market for electronic transactions is growing at a phenomenal rate. Pakistan should not sit back and ignore this global phenomenon. To actively participate in the global economy, Pakistan must develop its e-commerce infrastructure. This comprise of three ingredients: legal framework, security of transactions and e-readiness of the banks.

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Challenges of the E-Banking Revolution

Electronic banking is the wave of the future. It provides enormous benefits to consumers in terms of the ease and cost of transactions. But it also poses new challenges for country authorities in regulating and supervising the financial system and in designing and implementing macroeconomic policy.

Electronic banking has been around for some time in the form of automatic teller machines and telephone transactions. More recently, it has been transformed by the Internet, a new delivery channel for banking services that benefits both customers and banks. Access is fast, convenient, and available around the clock, whatever the customer's location (see illustration above). Plus, banks can provide services more efficiently and at substantially lower costs. For example, a typical customer transaction costing about $1 in a traditional "brick and mortar" bank branch or $0.60 through a phone call costs only about $0.02 online.

Electronic banking also makes it easier for customers to compare banks' services and products, can increase competition among banks, and allows banks to penetrate new markets and thus expand their geographical reach. Some even see electronic banking as an opportunity for countries with underdeveloped financial systems to leapfrog developmental stages. Customers in such countries can access services more easily from banks abroad and through wireless communication systems, which are developing more rapidly than traditional "wired" communication networks.

The flip side of this technological boom is that electronic banking is not only susceptible to, but

may exacerbate, some of the same risks—particularly governance, legal, operational, and

reputational—inherent in traditional banking. In addition, it poses new challenges. In response,

many national regulators have already modified their regulations to achieve their main

objectives: ensuring the safety and soundness of the domestic banking system, promoting

market discipline, and protecting customer rights and the public trust in the banking system.

Policymakers are also becoming increasingly aware of the greater potential impact of

macroeconomic policy on capital movements.

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Literature Review

INDIA

India is still in the early stages of E-banking

growth and development. Competition and

changes in technology and lifestyle in the last

five years have changed the face of banking. The

changes that have taken place impose on banks

tough standards of competition and compliance.

The issue here is – 'Where does India stand in the scheme of Ebanking.' E-banking is likely to

bring a host of opportunities as well as unprecedented risks to the fundamental nature of

banking in India.

The impact of E- Banking in India is not yet apparent. Many global research companies believe

that E-banking adoption in India in the near future would be slow compared to other major

Asian countries. Indian E-banking is still nascent, although it is fast becoming a strategic

necessity for most commercial banks, as competition increases from private banks and non

banking financial institutions.

Despite the global economic challenges facing the IT software and services sector, the outlook

for the Indian industry remains optimistic.

The Reserve Bank of India has also set up a "Working Group on E-banking to examine different

aspects of E-banking. The group focused on three major areas of E-banking i.e. (1) Technology

and Security issues (2) Legal issues and (3) Regulatory and Supervisory issues. RBI has accepted

the guidelines of the group and they provide a good insight into the security requirements of E-

banking.

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BRITAIN

All most all the leading banking institutions in the United Kingdom provide the facility of internet banking. All of the banks and financial institutions endow with services that are available through internet facility and the security is their main assurance.

Through online banking you can get loan and mortgage facility by just filling online applications, you can check your account balance any time and the bank statements can be viewed online also.

You can verify the transactions and many banks supply information of transactions for the last few months. Paying of bills is also very easy these days with online banking.

Bank of Scotland as well as Halifax is the two of United Kingdom’s very well known banks. They have been long known for the trustworthy services. They have many branches and their internet services are also good.

The Northern Bank is a renowned bank and in their website you will find all the relevant information. Through the website of Co-operative Bank you can get the necessary details of their working methods.

Through the internet banking you can get the services of insurance, private loans, investment plans and all of these can be done through simple online application.

Some of the other banks which provide useful assistance through their internet banking are those of HSBC; NatWest; One Account, The; Standard Life Bank; Barclays; Nationwide; First Direct; The Co-operative Bank’s internet bank – smile; Abbey and many other but you can get the assurance for good customer service.

Internet banking has gained huge popularity among the people of United Kingdom. Many of the banks in United Kingdom are being explored for the functions of buyer empowerment and also for the attributes of the internet banking.

Online banking has long been an important area of interest so many studies are done to make new developments to meet the various expectations.[1]

[1] http://pcinternetbanking.com/internet-banking-in-the-united-kingdom/

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http://pcinternetbanking.com/internet-banking-in-the-united-kingdom/


UNITED STATES

Internet banking has gained its popularity over the years and has enhanced internet based capabilities and online marketing as well as e-banking. It saves a lot of time and you get full information of every transaction you have made. Internet banking in the United States has quite a good impact on the people there.

According to a study report around 53 million and possibly more than that if not less Americans are using the benefits of banking online, the ratio being one out of four for adults.

But there are many bank users who don’t trust financial institutions for banking online for the sake of protecting their account. They are only focusing on the negatives rather than the positives. Though online banking reduces on road robberies but personality thievery, various scams and other online robberies has led many people not to trust the institution.

Recent studies say that for this reason 40% of the users that may be almost same to nearly 70 million or more adults having bank accounts do not have faith in online transactions.

Recently several governmental forces and a number of industries have joined hands to fight against the online frauds to provide the users a decent understanding and faith on this service.

In spite of the negatives involved, worries and security faults it has not succeeded totally in turning away people for the benefits associated with it are more worthy. The users without any theft concern are making high balance transactions showing great loyalty and trust on their institution.

They are also sharing their experience on the benefits of online banking to their family and friends and referring them to do the same. This has led to the growth of internet access and is estimated to grow itself as people start becoming more internet savvy and technologically literate.[2]

[2] http://pcinternetbanking.com/internet-banking-in-australia/

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http://pcinternetbanking.com/internet-banking-in-australia/


AUSTRALIA

Internet Banking in Australia has been a huge source for increase in national income and prospect. Many investments are made so that the scenario grows in a much more positive way. The report of Wallis Inquiry presented the facts that internet banking is an important field which faces major competition.

There is no denying the fact that favorable conditions prevail in Australia for further growth and development in the internet banking sector. The good communication systems that are all the more improving have helped out the internet banking process. And the reality that majority people know how to operate a computer is another boost to the internet banking facility.

‘ABA Industry Standard’ has mentioned some provisions for internet banking in Australia. The scope of services that the banks must provide if they are supplying internet banking facility are those of:

• Service of registration of the client online

• The funds can be transferred between the accounts

• The consumers can enquire about their balances of the accounts

• Payment of bill to the creditors

• Funds can be transferred involving the third parties

• Applications for loan can be submitted online

• The calculations for different financial aspects can be done online

• Updates and reviews for the respective investments will be submitted

Initially only two out of fifty-two banks in Australia had started the internet banking facility. But gradually the number has increased subsequently. Some of the most successful banks of Australia are those of Commonwealth Bank; Advance Bank; Metway; ANZ; National Australia Bank; Bendigo Bank Limited; Citibank Australia; Deutsche Bank; Macquarie Bank Limited and many more. Internet banking has made all the banking functionality easy and effective. The fact that needs consideration is that the customers must not sacrifice with the privacy of their transaction information.[3]

[3] http://pcinternetbanking.com/internet-banking-in-the-united-states

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Research Problem

The Internet Banking in Pakistan has not been able to make its mark since its inception. It has undergone many challenges and threats and the main reason for that is the lack of education and research and development in this particular field. The government has not yet taken any significant steps rather than just passing an ordinance in order to provide the banks a greater platform to grow their horizons in the field of internet banking to meet the global benchmark. However, UBl has emerged as the only bank in Pakistan with wide range of product and services for its consumers of all levels along with few other banks. Even the way banks in Pakistan market their other products and services through advertisements; there has not been a great deal of focus for marketing the e-products and services. Other than that not even a related work force of information and technology and the machinery to is available nor even looked in by banks to focus in this area.

The other major hurdle that banks come across is the lack of awareness among general public and the consumers or customers of the bank. This is because lack of education and information available to them. However it’s the responsibility of the banks to educate their customers and shift them toward the modern banking system and to make them understand its advantages and importance which banks in Pakistan fail to do so.

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Research Objectives

The main objectives of this study are:

Objectives of a project tell us why project has been taken under study. It helps us to know more

about the topic that is being undertaken and helps us to explore future prospects of the topic.

Basically it tells what all have been studied while making the project.

The various research objectives of the study are:

1. To study the internet banking facilities offered by the banks to its

customers

2. To study as to how much internet banking has penetrated in the

minds of the customers

3. To gain insights about functioning of internet banking.

4. To explore the future prospects of internet banking.

5. To study the benefits that are provided to the individual under

internet banking

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Hypothesis

Hypothesis 1;

Is UBL the benchmark in e-banking in Pakistan?

Hypothesis 2;

Has internet banking penetrated in the minds of the customers?

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Research Methodology

DATA COLLECTION METHODS

The selection of the data collection methods is one of the key aspects of a research design. Data can be described as primary or secondary based upon its source.

Secondary research data are data that have been collected for some other related research study previously conducted. Not much research studies have been done related to this topic but some relevant secondary data has been observed. Through internet research, some important points have been acquired from some articles about Internet banking around the world specifically India, Britain, United States and Australia. Other secondary data has been collected from reputable research journals and some relevant internet search engines such as Yahoo and Google. We have conducted a series of semi-structured interviews to determine the business student’s attitudes towards e-banking.

Primary research data is collected expressly to help solve the problem at hand. As this research study is exploratory study so data has been collected through the use of various survey methods such as personal interviews and questionnaires. The practices involved, asking informal questions from university students about their perception towards e-banking.

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Hypothesis 1;

Is UBL the benchmark in e-banking in Pakistan?

Methodology of Data collection

Exploratory ResearchHere, research is designed to allow an investigator to just look around with respect to some phenomenon, with the aim being to develop suggestive ideas. The purpose is to gather as much information as possible concerning a specific problem. Exploratory research is often used when a problem is not well known, or the available knowledge is not absolute. The technique that is best suited for information gathering when performing an exploratory research is interviews.

Therefore, data was gathered from 19 different banks with the help of all the classmates who searched the data through internet and through personal interviews form personnel in different banks assigned to them.

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Online Services & Products by UBL

My Accounts

Simple and intuitive 24/7 access to your accounts. You can keep an eye on cash flows, transactions and check real-time account balances. Manage Multiple Accounts Using net banking, the customers can manage more than one account. All accounts are linked, which enables them to perform fund transfers and set auto transfers between these accounts. 24/7 Account Access UBL net banking lets you bank when and where you want to, so you can manage your finances on your schedule -24 hours a day, 7 days a week. It is the safe, fast and FREE way to view your account in the comfort of your home

UBL net banking Goes Mobile!UBL net banking has now become your 24/7 companion.

Pakistan’s favorite Internet banking destination – UBL net banking is now accessible to our valued customers through any GPRS (Internet) enabled mobile phone.

With its unparalleled features of instant funds transfers, bill payments, and purchase of prepaid vouchers, UBL net banking on mobile Internet is bringing these amazing features closer to you. You no longer have to reach out to the nearest computer.

That’s right you can now access your UBL bank account 24 hours a day 7 days a week - anywhere, anytime, any mobile phone …

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All you need to do is enable the GRPS (Internet) on your mobile phone and logon to the UBL net banking webpage like you do on your computer.

Real-Time Account Balance & Summary net banking offers easy, 24-hour access to the account information. The customers can see an overview of the listed accounts in a summarize form with the available account balance. Using net banking, the customer can also keep an eye on their cash flows, transactions and check their balances before paying their bills or scheduling a transfer.

Download Statement Real -time account statements can be viewed, printed and e-mailed. Customers can specify the date range for viewing the account statement and also graphically analyze account statement. Moreover statements can be downloaded in various types of formats.

Access your Credit Card and Cashline Account Being a UBL account holder, customers can pay their monthly credit card bills online, provided your Credit Card Account is linked. Net banking also facilitates Cashline customers to view their account and carry out transactions on the internet.

Pay Anyone

Transfer funds from net banking account to anyone instantly .Pay Anyone lets you authorize specific deposits in any UBL account or deliver a cheque to anyone, anywhere in Pakistan .The process is fast, easy and secure. Fund Transfer with Portfolio net banking allows customers to manage more than one account online .Customers can easily view and perform fund transfers within their linked accounts.

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Door Step Check Delivery UBL net banking offers customers an efficient and most convenient delivery of funds to their beneficiaries anywhere in Pakistan, through Tezraftaar cheque delivery in Pakistan. Customers can simply add their beneficiaries and instruct fund transfers from their internet banking account.

Third Party Fund Transfer Customer can transfer funds from net banking account to any UBL third party account instantly. To transfer funds to a third party account, the customer is required to add the account to his portfolio. Once added, the customer can instruct transfers to third party account.

Pay Bills & prepaid

Prepaid Vouchers Utility Bills Mobile Bills UBL Bills UBL Funds Investments Online Shopping

Alerts

Customers can set alerts to track movements in the listed accounts. The customer can assign a target for alerts. Alerts can be of the following types.

Balance Alert Statement Alert Transaction Alert Cheque Tracking Alert Low/High Balance Alert

Customers can perform all the above transactions and more, from the comfort and convenience of your home or office internet-connected computer, at any time of the day or night

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https://www.ubl.com.pk/ebank/features/PayBillsDonations.asp


Mobile Internet Access

UBL net Banking on Mobile Internet

UBL net banking – Pakistan’s favorite Internet banking destination, was introduced four years ago with a set of first-of-its-kind features.

As the Internet usage in Pakistan grew over the years, UBL net banking became one of the fastest growing Internet banking services. Now that mobile phones have become a necessity even for the common man in the country, UBL wants to give its customers more power and convenience making their UBL account more accessible than ever before.

Introducing United Bank’s Internet banking on mobile through the Wireless Application Protocol (WAP) is yet another effort by the bank to bring innovation & convenience to its customers. To maintain the standards of excellence and provide maximum quality, we are currently offering the following features of UBL net banking on Mobile Internet:

UBL Bank Account Statement UBL Credit Card Balance Inquiry

Pay Anyone

Pay Utility/mobile Bills

Buy Prepaid vouchers[4]

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[4] https://www.ubl.com.pk/ebank/features/

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Findings

The data collected shows that the hypothesis considered proved to be correct because UBL right now the only bank with most e-services and products for its customers. Though it has many rivals like Dubai Islamic Bank, MCB and Standard Chartered Bank which are providing almost the same services but UBL has excelled by providing NRP services which Dubai Islamic bank is not. So it makes UBL leader in internet banking in Pakistan and therefore we can say that today UBL is the benchmark through which we can compare other banks from.

Conclusion

UBL is the leader in internet banking in Pakistan today. There are many local and other international banks with great reputations and with bigger clientele but are not providing much e-services and products. The main reason is that consumer’s trust lies more in conventional banking because of slow web interface, lack of knowledge, fraud and other risks associated.

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Hypothesis 2;

Has internet banking penetrated in the minds of the customers?

Sample design

Doing research via sampling was important because of impossibility of finding all of a population, as well as other restrictive parameters like cost, time etc. Our sampling decision should be in-coordination with the research and data objectives. The method opted for taking samples was `Non-probability sampling’. It was a `Purposive Non-probability sampling/ Judgment Sampling’ was used. The key assumption underlined this type of sampling is that, with sound judgment or expertise, and an appropriate strategy, one can carefully and consciously choose the elements to be included in the sample, so that samples can be developed that are suitable for one’s needs.

Sample Size: - 30

Questionnaire: -

A questionnaire consists of a set of questions prepared to respondents for their answers. Because of its flexibility, the questionnaire is by far the common instrument used to collect primary data. Closed Ended as well as Open Ended questionnaire were used in my market research.

Drafting of a Questionnaire: -

The formulation of the questionnaire, i.e., the structure and the disguise to be used in the questionnaire depends upon the kind of information that is desired. Questionnaire was prepared over a period of 5 days by intensive brainstorming. A copy of the questionnaire has been attached as an annexure to the project.

Since my objective was to derive out the maximum information out of the passengers without making the whole exercise boring and troublesome, I decided to keep majority of the questionnaire close-ended.

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In order to generate and sustain the interest of the respondents, the initial questions pertained to the gathering of simple information like the knowledge of internet banking, the choice of their bank and the main areas of their transactions. Since, I had to balance the twin objectives of gathering maximum information and at the same time retaining the interest of the customers, I was compelled to squeeze in a lot of questions and club them up in a single question.

LIMITATIONS

The following are the limitations with this report

1. MORE FAITH ON THE CONVENTIONAL BANKING SYSTEM.

People have more faith on the conventional banking system rather than the internet banking

2. BUSY SCHEDULE.

People were mostly unwilling to talk because of their heavy schedule or they get annoyed with the phone calls or even if they are asked about this face to face.

3. RISKY PROFILE.

Some people think that transferring money is having a lot of risk and rather a waste of time so they don’t want to transfer their money in from their respective accounts

4. FRAUD

The very common difficulty in online trading is Fraud which can be faced by any customer. Fraud can take place in many ways like stolen of Password, online fund transfer to some other account, hacking etc. So some strict guidelines or actions should be taken by RBI in order to stop this kind of fraud which prevails online.

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5. SLOW WEB INTERFACE

Sometimes, customers have to face the problem of slow interface which is not satisfactory from the customer’s point of view. Sometimes the network fails in middle of their transaction making them worried as to whether their transactions got completed of not.

6. LACK OF KNOWLEDGE

Customers who do transfers online face the problem of proper knowledge regarding the use of their accounts and all the services which the banks provide them with their accounts.

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ANALYSIS

1. Are you aware of net banking services offered by the banks?

(a) Yes

(b) No

Analysis of the above diagram

It is good for the banks as most of the respondents were aware of the internet banking and all the services provided under internet banking

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2. In which company bank do you have your account?

(a) UBL

(b) Standard Chartered Bank

(c) HBL

(d) MCB

(e) Others


It was witnessed that today MCB has the largest customer base and after MCB, HBL has the highest customer base .Multi-national banks are also making their presence noticeable in the Pakistani scenario

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3. Do you feel safe in disclosing your details on net?

(a) Yes

(b) No


This question witnessed a fifty fifty answer from most of the respondents, few of the respondents felt safe in disclosing their details but still there were a lot people who felt unsafe in disclosing and feared their personal information may used by some other person

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4. Are you satisfy with your bank services?

(a) Yes

(b) No


It is very interesting to see that most of the respondents are happy from the services their respective bank is providing ,the rest of the respondents felt there is a scope of improvement still they were also happy

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5. What are your main transactions you would prefer to do by internet?

(a) Money transfers

(b) Checking of your current balance

(c) Create Fixed Deposits Online

(d) Request a Demand Draft

(e) Pay Bills

(f) Order a Cheque Book

(g) Request Stop Payment on a Cheque


It is interesting to see that a respondent would like to do all the transactions which one does personally on a visit to the bank. Thus, internet banking has a promising future ahead

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6. Are you aware of the benefits of net banking which are available?

(a) Yes

(b) No


It is pretty amazing to see that most of the respondents are aware of the benefits of internet banking

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7. Are you aware of the methods which can be undertaken to make any kind of fraud?

(a) Yes

(b) No


It’s pretty tragic but most of the respondents are unaware of the techniques which can be taken up for any type of fraud.

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8. Are you aware of all the methods which can be taken up to secure your transaction?

(a) Yes

(b) No


Even with the increasingly knowledge of internet banking most of the respondents are unaware the softwares and methods taken up by the bank to secure each and every transaction.

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9. Does your bank educate you about the internet banking services being offered?

(a) Yes

(b) No


Most of the respondents felt that they are not properly educated of internet banking and its benefits to them.

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10. Would you prefer using net banking instead of visiting your bank every now and then?

(a) Yes

(b) No


It was witnessed that most of the respondents preferred using internet banking over there conventional banking system. Thus, internet banking has a bright future ahead

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11. What benefits do you see in internet banking?

(a) Convenience

(b) Speed

(c) Transparency

(d) Time


Most of the respondents felt that the transparency provided by internet banking is the highest motivating factor for an individual to use internet banking; rest speed convenience and time are also the other motivating factors

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FINDINGS

An old Chinese saying goes: If you don't know where you are going - you will never get there.

Many people suddenly choosing their personal computers as the new way to view and manage their money. Why? Quite simple - because it is a valuable option to have.(refer question no. 1)

Every day more and more people are turning to the Technology for their personal banking. It is a safe, convenient way to shop for financial services, maintain bank accounts and conduct business 24 hours a day.(refer question no. 3)

Now, if you are already thinking about Technology as a tool in Banking you could probably set some of these goals: Selling financial products and services

Cutting operational costs

Branding & Market recognition

Keeping profitable customers

Bank customers can save time by banking online. There is no need to stand in one more line to perform the most basic transactions when they can be done quickly from the desktop PC anytime, day or night.(refer question no. 11)

Moreover complicated transactions or investment decisions, people like having direct control over their finances themselves. They find it convenient to access all of their financial information in one place.

Ease of use is one of the most important factors. Navigation through online banking should be simple and intuitive.

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Customers also choose banks whose online services are reliable.(refer question no.9)

Most Banks now offers a comprehensive range of financial products and services, including a FREE checking account and internet bill paying services.(refer question no.5)

In addition, an array of checking accounts is available in which you may also request a FREE check card. Hence most Banks of following Electronic Banking or Internet Banking FREE

Benefits for the bank should always reflect benefits for the customer of banking services.

Taking over customers from competition

Banks seeking new customers can use advantages of new distribution channels and acquire most profitable customer from their competition. It is a fact that people using E-banking are the ones who consider time as money and are the one with loads of money. Majority of banks see 80% of their business coming just 20% of the client base. This 20% customer base is vulnerable if the bank does not appreciate their time.

Building stronger customer relations

Offering new services, results in improved customer experience and stronger customer retention.

Bigger share in customer’s wallet

It is well known fact that customers tend to keep their finances in one place. Banks holding customer accounts therefore have opportunity to cross sell different products and services. Recent studies show that banks in the USA lost 20% of their most valuable customers in favor of non-bank FI flexible enough to offer diversified services and products. Identifying profitable customers Customers using E-banking services have higher balances than average branch teller customers. Investments are more than twice higher than the average.

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SUGGESTIONS

To prevent online banking from remaining an expensive additional channel that does little to retain footloose customers, banks must act quickly.

The first and most obvious step they should take is to see to it that the basic problem fueling dissatisfaction have been addressed.

In addition, to meet the challenge of online brokerage and other new entrants, banks would need to add “supermarkets” selling products such as mortgage, mutual funds and insurance.

The banks should take up responsibility of educating the customers and all the benefits of internet banking

There is a need felt for the banks to promote the online banking services and proper promotional activities are not taking place.

Banks need to appeal to customers who may not be technologically sophisticated, and should not require an engineering degree to get started or use the service.

CONCLUSION

From all of this, we have learnt that information technology has empowered customers and businesses with information needed to make better investment decisions. At the same time, technology is allowing banks to offer new products, operate more efficiently, raise productivity, expand geographically and compete globally. A more efficient, productive banking industry is providing services of greater quality and value.

E-banking has become a necessary survival weapon and is fundamentally changing the banking industry worldwide. Today, the click of the mouse offers customers banking services at a much lower cost and also empowers them with unprecedented freedom in choosing vendors for their financial service needs. No country today has a choice whether to implement E-banking or not given the global

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and competitive nature of the economy. The invasion of banking by technology has created an information age and commoditization of banking services. Banks have come to realize that survival in the new e-economy depends on delivering some or all of their banking services on the Internet while continuing to support their traditional infrastructure.

The rise of E-banking is redefining business relationships and the most successful banks will be those that can truly strengthen their relationship with their customers.

Technology innovation and fierce competition among existing banks have enable a wide array of banking products and services, being made available to retail and wholesale customer through an electronic distribution channel, collectively referred to as e-banking. Banks have traditionally been in the forefront of harnessing technology to improve product and efficiency. Technology is altering the relationships between banks and its internal and external customers. Technology has also eroded the entry barriers faced by many industries. With one time investment, technology has brought about superior products and channel management with a special focus on customer relationship. The incremental costs incurred for expansion and diversification are also more beneficial.

The major driving force behind the rapid spread of e-banking is its acceptance as an extremely cost effective delivery channel. But on the flipside, it is associated with risks such as reputation risk, security risk, cross-border risk and strategic risk, which are unique to e-banking. Banks need to have an effective disaster recovery plan along with comprehensive risk management tool is significant not only to the bank but also to the banking system as a whole. Internet has created plenty of opportunities for players in the banking sector. While the new entrants have the advantage of latest technology, the good-will of the established banks gives them a special opportunity to lead the online world. By merely putting existing service online won’t help the banks in holding their customer close. Instead, banks must learn to capitalize their customer’s different online financial-services relationships

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Annexure

QUESTIONNAIRE

1. Are you aware of net banking services offered by the banks?

(a) Yes

(b) No

2. In which company bank do you have your account?

(a) UBL

(b) Standard Chartered Bank

(c) HBL

(d) MCB

(e) Others

3. Do you feel safe in disclosing your details on net?

(a) Yes

(b) No

4. Are you satisfy with your bank services?

(a) Yes

(b) No

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5. What are your main transactions you would prefer to do by net?

(a) Money transfers

(b) Checking of your current balance

(c) Create Fixed Deposits Online

(d) Request a Demand Draft

(e) Pay Bills

(f) Order a Cheque Book

(g) Request Stop Payment on a Cheque

6. Are you aware of the benefits of net banking which are available?

(a) Yes

(b) No

7. Are you aware of the methods which can be undertaken to make any kind of fraud?

(a) Yes

(b) No

8. Are you aware of all the methods which can be taken up to secure your transaction?

(a) Yes

(b) No

9. Does your bank educate you about the net banking services being offered?

(a) Yes

(b) No

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10. Would you prefer using net banking instead of visiting your bank every now and then?

(a) Yes

(b) No

11. What benefits do you see in internat banking?

(a) Convenience

(b) Speed

(c) Transparency

(d) Time

Personal Information

Name:

Age:

Sex: ( ) Male ( ) Female

Phone No:

Occupation:

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References/Bibliography

Website



http://pcinternetbanking.com/internet-banking-in-the-united-states/

www.qla.net.pk

epubl.luth.se

ubl.com.pk and all banks websites mentioned in chart in pg24

http://ezinearticles.com/?A-Brief-History-of-Internet-Banking&id=353450

http://www.expresscomputeronline.com/20020916/indtrend1.shtml

E-Finance by Avinash Shankar

www.ubl.com.pk

47

http://www.ubl.com.pk/

http://www.expresscomputeronline.com/20020916/indtrend1.shtml

http://ezinearticles.com/?A-Brief-History-of-Internet-Banking&id=353450

http://www.qla.net.pk/



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