9

CHAPTER ONE

Introduction
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1.0 Introduction:

1.1 :Background of the report

In retail banking today, marketing-to-one initiatives, innovative delivery channels and

value-added services offer competitive advantages to resourceful institutions. Banks and
providers of financial services are developing and deploying sophisticated applications
that personalize service with branch office tellers, ATM machines, and home-based
personal computers. Spread across networks, these applications update frequently and
electronically to the central/distributed database/databases of the bank. The entire process
is “Online Banking”. In Bangladesh, Online Banking has been established in 2000. We
have prepared a report on Online banking system. This report gets a comparison study on
Online Banking system between Prime Bank and HSBC Bank in Bangladesh. Our main
focus of this report is to inform the common people or customers about online banking
and which bank has advanced online system through comparison.

1.2: Origin of the report

Bachelor of Business Administration (BBA) course requires one month attachment to

complete a report, approved and authorized by our Course Instructor of Business
Communication, Dr. Faheem Hasan Shahed, assistant professor of School of Business
Administration of American International University – Bangladesh (AIUB). Our group
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PASIFIC’S took the opportunity to do the report on the topic – ‘Online banking system
in Bangladesh (A comparison study between multinational and private bank)’.
1.3: Purpose of the report

The purpose of our report is to inform the common people about online banking system.
Besides, our purpose of this report is also to compare between multinational and private
bank on online banking system.

1.4: Scope of the report

We have created a report on online banking. By this report, readers can easily understand
about online banking system through the bank. Besides, we have also prepared a
comparison on online banking because through this report readers can get a idea and they
can take decision that which bank has much better online system for transactions in the
bank. Because every customer are supposed to open an account or do transaction in a
safety and respectable bank.

1.5: Source of information

We have collected our information of this report via many sources. But we define these
sources in 3 categories----

1. Primary data sources

2. Secondary data sources
3. Other data sources

1.6: Research methodology

We have prepared our report by researching in various ways. One of the sources is
primary data sources. In primary data sources, we made a questionnaire consisting of 12
questions to survey in prime bank and HSBC bank. Besides we got some report on online
banking from several banks. We also face to face interview from the customer of both
HSBC and Prime Bank. In secondary data sources, we browse Internet in different kinds
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of web site and got some information for our report. We also gathered enough
information from many magazine, newspaper and books.

1.7: Problems during finding information:

We faced some problems for finding information. We hesitated to select the bank for
going and finding information. At last we selected one multinational and one private bank
and went there for appointment. But, the executive of IT department of the banks also
lingers to give us for appointment. When we on the process of survey, we realized that it
is very hard for us to handle technical information.
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CHAPTER TWO

Discussion
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2.0 Description

At first, we are trying to define some definition about online banking. Because if our
reader does not know that what is online banking, how it works, transfer payment and
also many thinks, it will not be possible to understand our comparison between private
and multinational banks on online system.

2.1 Definition of online Banking

If you are like most people, you have heard a lot of about online banking but probably
have not tried it yourself. You still pay your bill my mail and deposit check at your bank
branch, much the way your parents did. You might shop online for a loan, life insurance
or home mortgage, but when it comes to commit, you feel more comfortable working
with your bank or agent you know and trust.

Online banking is not out to change your money habits, Instead, it uses today’s computer
technology to give you the option of bypassing the time consuming, paper-based aspects
of traditional banking in order to manage your finance more quickly and effectively.
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2.2 Definition of virtual Bank

If you don’t mind to forgoing the teller window, lobby cookie and kindly bank president,
a “virtual” or e-banking may save you very real money. Virtual banks are banks without
bricks; from the customer perspective, they exist entirely on the internet, where they offer
pretty much the same service and adhere to the same federal regulations as your corner
bank.

Virtual bank pass the money they save on the overhead like buildings and tellers along to
you in the form of higher yields, lower fees and more generous account thresholds.
The major disadvantage of virtual banks revolves around ATMs. Because they have no
ATM machines, virtual banks typically charge the same surcharge that your brick-and-
mortar bank would if you used another bank’s automated teller. Likewise, many virtual
banks won’t accept deposits via ATM; you will have to either deposit the check by mail
or transfer money from another account.

2.3: How it works

Once you’ve entered your user name and password to log on to your secure online bank
site, you select the accounts you wish to view, and then enter the URL, user name and
password for each. Your banking site atomically links, or aggregates, them into your
banking site.
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Transactions initiated through your bank site aggregator are atomically entered into the
appropriate online accounts just as if you were logged on to them directly. No more
flipping between web sites, each with its own user name and password requirements, to
mange your finances.

With account aggregation, you can view the status of all your accounts, including
payment history and recent charges, all from one secure web site, making bill payment
faster and easier than ever. It’s also great if you need to check the status of your accounts
or pay your bills on the road.

Most banks that provide account aggregation do so free of charge as a relatively

inexpensive online enhancement to attract and keep new banking customers.

2.4: Advantage & disadvantage of on-line banking

Advantages of on-line banking

 Convenience: Unlike your corner bank, online banking sites never close; they are
available 24 hours a day, seven says a week, and they’re only a mouse click away.
 Ubiquity: If you’re out of state or even out of the country when a money problem
arises, you can log on instantly to your on-line bank and take care of business,
24/7.

 Efficiency: You can access and manage all of your bank account, including IRAs,
CDs, even securities, from one secure site.

 Effectiveness: Many on-line banking sites now offer sophisticated tools, including
account aggregation, stock quotes, rate alerts and portfolio managing programs to
help you manage all of your assets more effectively. Most are also compatible
with money managing programs such as quicken and Microsoft Money.

Disadvantages of on-line banking

 Start-up may take time: In order to register for your bank’s online problem, you
will probably have to provide ID and sign a form at a bank branch. If you and
your spouse wish to view and manage your assets together online, one of you may
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have to sign a durable power of attorney before the bank will display all of your
holdings together.

 Learning curve: Banking sites can be difficult to navigate at first. Plan to invest
some time and /or read the tutorials in order to become comfortable in your virtual
lobby.

 Bank site changes: Even the largest banks periodically upgrade their online
programs, adding new features in unfamiliar places. In some cases, you may have
to re-enter account information.

 The trust thing: For many people, the biggest hurdle to online banking is learning
to trust it. Did my transaction go through? Did I push the transfer button once to
twice?
Best bet: always print the transaction receipt and keep it either your bank records until it
shows up on your personal site and /or your bank statement.

2.5: Online banking services

Most online banking sites offer these basic services:
 View account balances, including checking, savings, IRAs securities
 Access account history
 Transfer funds between accounts
 Schedule future transfers
 Pay bills electronically
 Schedule automatic recurring bill payment

Many online banking sites also offer these capabilities:

 Account aggregation: View balances and market values of online
accounts held at other institutions, including investments, credit cards,
rewards programs and IRAs

 Send payments to individuals via e-mail

 Trade stocks and mutual funds
 Track real-time stock quotes
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 Receive trust and stock statements online

 View images of bill statements, checks and deposit slips
 Download site information into money management programs such as
quicken and Microsoft Money
 Receive Web alerts via e-mail, wireless devices and private banking
site
 Live chat with customer support

2.6: Transfer Payment

If you elected to do so at signup, you can easily transfer money from one bank account to
another by using the transfer function: you designate the transfer amount, from and to
accounts, and when you want the transaction to occur, i.e. now or on a future date. The
site will prompt you to confirm what you’ve entered. It may also warn you to click the
final submit button only once; otherwise, you may trigger a double transfer.

It’s a good idea to print out your transfer receipt page and keep it with your account
records until you see online that it has cleared or it is reflected on your bank statement.
Many sites also offer an array of transfer tools that allow you to set or change recurring
transfers, check the status of a transfer and receive a transfer alert via e-mail when the
transfer clears.
Use this function to:
 Transfer money between accounts within your bank
 Make a payment on a loan from your bank
 Take an advance on your bank credit line
 Wire money to your account at another bank
 Transfer money from your account at another bank to your within the bank
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Hypthetical copy-paste payment system in work

2.7: Online shopping: Loans, credit cards & mortgage

Obtaining a loan has never been faster or easier than it is via the internet. Financial
institutions, money lenders and virtual brokers who will shop for a loan for you have
quickly embraced the savings in time, man-hours and paperwork that online loan
application and approval affords. In some cases, they even pass that savings on to you in
the form of better rates.

Whether you apply for a loan online or merely shop for the best terms and price to use in
negotiating with your bank or agent, a web search for loan information has become a
common first step for many credit-seeking individuals.
Auto loans and leasing

The internet has revolution the way we research and buy vehicles today. In just a few
minutes online, you can compile a virtual history of any used vehicle simply by knowing
its vehicle identification (VIN) number, or get quickly up to speed on new models by
checking out performance ratings, safety testing, car critic reviews and customer
feedback.

The same is true with auto loans and leases. Whether you buy from a franchise, a used
car dealer or a private individual, you have numerous loan options online that can take as
little as five minutes from application to approval. In many cases, you’ll have cash in
hand within 24 hours, a definite plus when negotiating for your new wheels.
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Experts agree that consumers lose more money by not understanding their automobile
lease than or any other form of auto financing. A consumer brochure on leasing is
available online from the Federal Reserve Board.

Should you buy or lease? How much will your lease cost? Bank rate provides the
calculators as well as the web’s most up-to-date rates on new and used vehicle loans,
lease buyout and refinance terms.

Credit cards
Yow would have to be a hermit not to have received a flood of accredits offers through
the mail during the past few years. But the best way to find a card with the rate and
features you want is to use the internet.

Bank rate offer apples-to-apples comparison of dozens of the best card offers; you can
also get a wealth of information by logging onto the various card web sites themselves.

Virtual banks offer some of the best credit card rates available. In addition, some online
issues allow you to build your own customized credit card, so you can choose a low
introductory ARR that jumps higher within a short period or a fixed rate that does not
change. You can even put a picture of your dog or the kids on it.

Credit card sites have become powerful buying portals, too, enabling you to receive
discounts and reward points when you make purchases with p[partner companies through
the credit card site. You can also track your account and payment activity on many card
sites, or link them to your private bank site’s account aggregator and access your card
information there.
Some online leaders also offer instant lines of credit with major online retailers that sell
computers, furniture, jewelry, art and other high-ticket items. Essentially, these credit
lines act much the same as the old revolving accounts once issued by retailers. Today,
many online retailers also offer partnered cards through the major credit card brands.

And don’t forget to check with your own bank when shopping for a loan: they may meet
your best quote or sweeten the terms just to deepen their relationship with you.

Mortgage
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The expansion of mortgage lenders onto the internet is a homebuyer’s dream. No more
visits to banks or mortgage barkers, no more long-winded phone calls—you can save
hours by shopping for a mortgage online first before selecting your lender.

Even before you consider individual mortgage lenders, you can easily use online
mortgage calculators to determine how much house you can afford, what your monthly
payments will be, and interest rates nationwide at Bank rate’s daily update of mortgage
rates.

You will a wealth of information on mortgage programs available online. Many mortgage
brokers, banks and credit unions have detailed information and even loan applications on
their web site.

2.8: Trade securities

If you signed a trading authorization form, you and also your agent also can use the site
to purchase, redeem or exchange equity shares through the bank’s securities subsidiary.
Use this function to:
 Purchase additional shares of a bank fund by transferring money from an account
 Redeem fund shares via transfer into a deposit account
 Exchange shares between fund accounts, including IRAs
 Transfer between a brokerage account and a secondary linked account

2.9: Account posting

Most internal online transfers, including those between deposit accounts, brokerage
accounts, payments from deposit account to loan accounts and credit-line advances, post
when requested and both accounts are immediately updated. Transfers into your accounts
at other banks typically post within 2-3 days.

2.10: Alerts
For peace of mind, you may want to take advantage of your site’s web alert options. This
instructs your bank to notify you via e-mail;, wireless device and also on your private
banking site when a particular event occurs.
Alerts can help you better manage your accounts by raising a flag when:
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 An account balance rises above or drops below a certain amount

 A CD is about to expire
 A check clears
 An account becomes overdrawn
 The next-to-last recurring transfer occurs
 A transfer fails
 A new statement is available

2.11: Comparison study

We have prepared our repot by survey between privet and multinational bank. Because of
shortage of time and resources, it is not possible for us to survey all the privet and
multinational bank in Bangladesh. For this reason, we chose Prime Bank from private
sector and The Hong Kong and Shanghai Banking Corporation Limited from
multinational sector for our comparison.

To impart the common people or customers about online banking, there are many
purposes in our report. Such as, about ideas online banking, how it works, origin of on
line banking, how money is transferred and others that we discussed above. Besides, our
major purpose which is relevant to the topic of this report is a comparison study between
HSBC & Prime Bank. It (Comparison) is necessary to know the customer because every
customer is supposed to open an account in a respectable and safety bank. Now we are
going to compare between HSBC and Prime Bank---------------

Comparison between HSBC & Prime Bank

To compare we have created some points. Points are as follow------
 About software, hardware and network
 About security system
 Services offer to the customer
 Establishment of online system
 Benefits and demand of the customer
 Major Problem of Both Banks
About software, hardware and network:
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Network:
A reliable communication infrastructure if required. There are some
solutions for wide area network. Bank needs one of the following to establish
WAN.
1. Fiber optic
2. VSAT SCPC/Hub based communication
3. Radio link/Micro Wave communication
4. BTTB leased line
5. X PSDN line

Here for network, Prime Bank use VSAT and BTTB line
HSBC use VSAT and Radio link

Hardware:
1. Storage server
2. Application server
3. Web server
4. Dell Brand Server
 Operating system – Unix
5. Hp Compaq / Dell Brand Client
 Operating System – Windows
Prime Bank use Q-21 storage and application server they also use terbo-t-2.23
Web server but HSBC bank use SCK storage server Q-21 application server and dell
brand server which are operated by UNIX.
Software:
For banking purpose prime bank use TEMENOS T24 and
HSBC use HFE (Hub Front End V- 2.3).

In present infrastructure, any branch banking service is implemented in the

following way (Both Prime & HSBC Bank):

1. Branch ‘A’ logs into Branch ‘B’ via Head Office. Head
Office the routing mechanism.
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2. A message shown on the branch ‘B’ terminal showing

that Branch ‘A’ is making a transaction on an account
of the Branch ‘B ’.
3. Branch ‘ A ’ makes necessary transaction
About security system:
For security software prime Bank use firewall (V-9.0.3.8.1.0) and HSBC use firewall (V-
12.9.0.0.6)

Services to the customer

Prime Bank and HSBC Bank provide many online services for their customer’s

Services of HSBC
1. Cash withdrawal from your account at any branch of the
bank.
2. Deposit in your account at any branch of the bank
3. Transfer of money from your account to any other
account with any branch of the bank
4. Cheque collection through local clearing and fund
transfer to depositor account where it is domiciled.
5. Internet Banking *
6. SMS Banking*
7. Paying bills in Online*
8. E-mail payment*
9. ATM Booth
** Internet Banking, SMS Banking, Paying bills in Online, E-mail payment are only for
corporate account.

Services of Prime Bank

1. Cash withdrawal from your account at any branch of the
bank.
2. Deposit in your account at any branch of the bank
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3. Transfer of money from your account to any other account

with any branch of the bank
4. Cheque collection through local clearing and fund transfer to
depositor account where it is domiciled.
5. SMS Banking

Benefits to the customer

Prime Bank and HSBC Bank provide many benefits for their customer’s

Benefits to the customer of HSBC

Customers will be able to enjoy full range of Modern Banking facilities without
Stepping towards a branch. They can—
1. Get real-time status of their bank accounts anytime,
anywhere.
2. Transfer funds from one account to another.
3. Pay utility bills such as telephone bills, electricity bills, etc.
4. Withdraw from and deposit to ATM, get mini statement as
well as detailed statement of the account
5. Get current status of the account, give instructions through
LAN phone as well as mobile phone
6. Operate account transactions from their home using web
site
7. Get current status of the account, give instructions through
Internet
8. customer can open account via internet( In the process)

Benefits to the customer of Prime Bank

Customers will be able to enjoy full range of Modern Banking facilities without
Stepping towards a branch. They can—
1. Get real-time status of their bank accounts anytime,
anywhere.
2. Transfer funds from one account to another.
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3. Pay utility bills such as telephone bills, electricity bills, etc.

4. get current status of the account, give instructions through
LAN phone as well as mobile phone
5. Operate account transactions from their home using web site

Benefits to the bank

Because of online Banking Bank’s are also benefited-

Of our serve we see that both Banks got almost same benefits

1. Performance of the Core banking System improves which

will eventually have positive impact on availability of the
system and promptness of the transaction.
2. As data will be stored at a central place, Bank management
can get adhoc reports and can have a clear picture of Bank
status at any time.
3. There will be no need to consolidate data from different
branches as it is done at present and there will be no
additional effort to back up data for disaster recovery. Data
will be replicated atomically to Disaster Recovery Site.
4. There will be separate Disaster Recovery Site located at far
distance from the production site, so as to minimize risk of
data loss.

2.11.1: Major Problems of Both Banks:

Both Banks have some problem in online Banking-

Problem of HSBC Bank

 Sometimes system shows hang.

 The Business environment of Bangladesh is not match properly.

Problem of Prime Bank

 Sometimes system shows hang.( More frequently then HSBC)

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 The Business environment of Bangladesh is not match properly.

 They are depending on INDIA for software engineer.

2.11.2: Customer’s view:

We also collect data from the accountholder of Prime Bank and HSBC Bank about there
online services. We select 40 accountholder from Prime Bank and 40 accountholder from
HSBC Bank.31 accountholder of HSBC Bank says that they are ok with their services but
9 people say they need progress. At the same time, 23 accountholder of Prime Bank say’s
that they are ok with that but 17 accountholder say’s they want some progress.

80
70
60
50
Prime
40
HSBC
30
20
10
0

2.11.3: Analysis

After collecting all the data from both banks about online banking system. We
have compared them with each other into different point. After comparing, we see
that- in the sector of software and hardware HSBC Bank is more advance then
Prime Bank because HSBC bank use HFE (Hub Front End V- 2.3) software
which is more advances then TEMENOS T24. The hardware of HSBC is also
very high, they use SCK storage server Q-21 application server and dell brand
server which are operated by UNIX. The network system of HSBC is more
advance then Prime Bank. They use VSAT and Radio link at the same time Prime
Bank use VSAT and BTTB line which is very slow. HSBC Bank is more advance
in security compared to Prime Bank. HSBC use more update firewall. HSBC
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Bank offered more online services then Prime Bank as a result the customer of
HSBC got more benefits. The customers of HSBC are more satisfied then Prime
Bank.

3.0: Conclusion

After analyzing all the data we have come up in a decision that HSBC Bank is
much better than Prime Bank because of having better online system in HSBC. At
the same time we have come up in a decision that, the On-line system of
Multinational Bank is better than Private Bank.

4.0: Recommendation

After analyzing all the data we recommend some improvements-

 The business environment of Bangladesh must be changed
because for this the bankers have to suffer many problems.
 We do not have efficient as well as skilled software engineer to
perform this kind of banking software.
 BTTB has to improve their quality
 Government should change some policy because sometimes it
hampers for the betterment of e-banking.