Electronic Banking Essay

Electronic Banking in Pakistan



As the universe has entered the 20 first century, one thing has become all excessively evident, any organisation that wishes to win in today ‘s cutthroat competition will hold to encompass Information Technology ( IT ) with ardor.

In this age of Information Technology new innovations and inventions are impacting all the Fieldss of life. Almost all sorts of organisations are stepping into the field of IT, in an attempt to increase their productiveness and spread out their client bank. The same goes for the Banking Sector. Today all the Bankss of the universe are following the tool of Electronic Banking.

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The demand of Electronic Banking was felt in South Asia during the last 5 to 7 old ages. This construct emerged as an indispensable tool for successful bank direction. Financial sector has been speedy to acknowledge this fact, and in Pakistan, most of the banking industry has moved off from the old leger based system to computing machines and mechanization in order to overhaul their operations. Although foreign Bankss were innovators of conveying this construct to South-Asia but they have yet to get down latest Electronic Banking patterns in Pakistan

Background – Electronic Banking

Electronic banking is an umbrella term for the procedure by which a client may execute banking minutess electronically without sing a brick-and-mortar establishment.

It is a signifier of banking in which financess are transferred through an exchange of electronic signals between fiscal establishments, instead than an exchange of hard currency, cheques or other negotiable instruments.

The growing in usage of the Internet world-wide and the development of processs enabling unafraid minutess online have created the new field of online banking, where clients deal with their Bankss chiefly or wholly through Internet connexions. Opening hours or location of subdivisions, unlike the traditional Bankss does non curtail such services. Both bing Bankss and new groups are already traveling into this potentially really of import country. Since online banking services can be accessed with equal easiness about anyplace in the developed universe, this raises the possibility of banking webs runing without respect to national boundaries, with attendant regulative jobs.

Banking on line, normally called Personal computer banking, electronic banking or Internet banking, has been around in one signifier or another for a decennary or more.

Forms of online Banking

Following can be the ways to bank on-line:

1 ) Internet Based entree

to account information through Bankss ‘ web site, via modem, utilizing a standard web browser such as Microsoft Internet Explorer or Netscape Navigator.

2 ) Bank Software:

Bank provides clients with proprietary package to put in in their computing machines. The package allows clients to link to bank ‘s computing machines over a secure web. The client basically dials straight into the bank alternatively of through the Internet.

3 ) Personal Finance Software:

Software such as Quicken or Microsoft Money allows client to interchange fiscal information with the bank. The package connects to the Bankss ‘ computing machines via an Internet based set up and downloads fiscal information from the client ‘s history. Many Bankss affiliate taking package sellers such as Intuit or Microsoft to do their systems compatible.

4 ) Pay-by-Phone Systems /Tele banking:

Allows a client to pay by telephone certain measures, or reassign financess between histories, with instructions to the bank. One must hold an understanding in progress with the establishment to do such transportations.

5 ) Point-of-sale Transportations:

Allows a client to pay for retail purchases with an EFT ( or “ debit ” ) card. In some cases, this card may besides be an ATM card. This is similar to utilizing a recognition card, but with one of import exclusion: the money for the purchase is transferred instantly — or really shortly — from client ‘s bank history to the shop ‘s history. An increasing figure of merchandisers are accepting this type of payment.

On-line Banking: a Revolution

The idea of today is the world of tomorrow but the ideas of Banking on Your OWN TERMS AT YOUR OWN DOORSTEPS, which seemed to be world of tomorrow, is no a more mystique.

What we can make NOW ( ? )

* It allows clients to make most of their fiscal minutess at place on a personal computing machine.

* Pay your measures on-line while you ‘re watching Television.

* Check your history balances from your digital cell phone as you stand in line to board a flight.

* Consolidate all your fiscal histories on-line in one convenient, secure location.

Have entree to friendly, helpful client service representatives

Why online Banking?

Unfortunately, banking is a “ necessary immorality ” that can take a big ball out of already busy agendas. Visiting a subdivision or ATM, paying measures by paper cheque ( and get offing them ) and equilibrating a checkbook all can be clip devouring. Banking online, by its nature, can automatize many of these procedures, salvaging clip and, in many instances, money. One can entree his history and do banking when ( and where ) it is convenient for him.

Following can be on-line banking services offered by assorted Bankss

– Check history balances

– Brand transportations between online histories

– Check the position of loans

– Path investings

– Apply for loans online

– Wage measures electronically

– Download history information to a personal finance package plan

On-line Banking Advantages

*Internet Bankss are unfastened 7 yearss a hebdomad 24 hours a twenty-four hours

* In general, you will happen lower fees and higher involvement rates for sedimentations due to the reduced cost of runing on-line and non necessitating legion physical bank subdivisions.

* Create a more in depth portfolio of each single client of what their demands and outlooks are.

* Be able to supply services to each client that are customized to their single penchants

* You will hold easy entree to account information and minutess, because any Internet-enabled computing machine can go your “ bank terminus. ”

* You will by and large hold latest current bank history information due to the mechanization of most systems.

* In many instances, online Bankss offer free measure wage, which can be a large economy in both money and clip.

* You can reassign financess electronically between histories.

Common E-Banking Services

Retail Servicess

Sweeping Servicess

Account direction

Account direction

Bill payment and notification

Cash direction

New history gap

Small concern loan applications, blessings, or progresss

Consumer wire transportations

Investment/Brokerage services

Commercial wire transportations

Loan application and blessing

Business-to-business payments

Account collection

Employee benefits/pension disposal

Current Scenario of Electronic Banking in Pakistan

Pakistan is widely considered to be in the Third Wave of developing economic systems that include states in Asia, Latin America, the Pacific Islands and the Middle East. These states started to follow the Internet from around 1993. Almost all have a province monopoly over the telecommunications sector with low tele-densities per population and high telecom costs, which restrict Internet entree to elitist groups in the population. Less than 2 per cent of the population is connected to the Internet. These states have weak political and democratic establishments where the authoritiess welcome new commercial chances.

The First Wave states include USA, Canada, and some Nordic provinces where the Internet took clasp in the 1980s, and became an established characteristic of societal, political and economic life. On norm, over 35 per cent of the population are connected to the net, with families ever connected online to the net 24 hours in the twenty-four hours in many instances.

Both the First and Second moving ridge of counties have much in common ; with both involved in the early development of the Internet. The spread between the two is quickly decreasing. Both have extremely developed telecommunication substructures, with extended webs of fiber ocular, satellite and ISDN lines that can react to exponential growing in demand for bandwidth. Knowledge of Internet applications is a mainstream activity, and a requirement for commercial credibleness. They have extremely developed information, airing engineering and content industries, with a strong export focal point. Both have strong authorities policies that aim to act upon the form of the future information society, with monolithic investings in research and development, instruction, preparation, IT and Internet developed research.

E-Banking in Pakistan:

Due to promotions in scientific disciplines and engineering, many foreign Bankss started offering Electronic Banking services in Pakistan. Electronic Banking offers enormous chances and saves cost and clip for both Bankss and clients.

E-Banking in Pakistan is still a comparatively new phenomena and is expected to turn now faster with future incursion of computing machines and cyberspace services in the state, handiness of a robust legal model, remotion of concerns about security of electronic minutess and enhanced dependability of communicating

Unfortunately Electronic Banking in Pakistan is still in the debut stage and the authorities with the private sector has to streamline many policies for its farther development and success. Although foreign Bankss took the inaugural but now there are private Pakistani Bankss that are doing promotions in E-Banking. The rate of engineering transportation from developed to developing states has been really slow in this respect.

In Pakistan the available engineering services are NIFT, ATM, ETPoS, Tele Banking and Central Depository Systems.

* NIFT was established in 1997, it is a engineering that uses images with high-velocity sorters to automatize cheque glade.

* ATMs are automated teller machines that provide installations for instant sedimentations and hard currency backdowns, and are soon available at around 200 locations in major metropoliss merely.

* ETPoS is a method of payment where goods and services are paid for at the point of sale, and is available in major metropoliss in a few super markets merely.

* Telebanking is telephone banking installation available merely in a few Bankss, and once more, in major metropoliss merely.

* The cardinal depositary system is a well- established system used in stock exchanges for recording and the transportation of securities.

Secure electronic minutess ( SET ) : This protocol was developed jointly by Visa and Master Card and is now baked by American Express. Major participants in e-commerce, networking, and calculating like Microsoft, Netscape, IBM, etc, are behind specifications of this protocol, and are therefore going an industry criterion for secured payments on the cyberspace. SET provides confidentiality through encoding ; message unity utilizing digital signatures, and hallmark of consumer and merchandiser individuality Use of this, method is ideal due to the degree of security that this method offers. However, constitution of this protocol will necessitate Internet merchandiser histories.

Smart cards:

It is a digital currency payment, which looks similar to recognition cards, but contains a microprocessor and a storage unit. The cards hold postpaid history information. Merchants who accept these records are credited for the dealing sum by card issuers. The usage of this engineering is safe but expensive to get. Pakistan will necessitate constructing a consensus among major stakeholders to put in doing this engineering available in Pakistan.

Value-added webs:

Pakistan could set up value added webs ( VAN ) for fiscal minutess to hasten fast and efficient flow of remittals to all major metropoliss and to enable exchange of electronic paperss. These webs will supply shared connectivity, security confidence of informations, and dependability of service. These webs will supply bank -to -bank transportation of financess for fiscal minutess, and will besides enable the exchange of electronic paperss to ease e-trade. These value added webs will besides ease B2B minutess utilizing EDI systems. The EDI Van ‘s will put to death authorised minutess between valid trading spouses. These webs will cut down proficient complexnesss and the cost of implementing dedicated connexions with a battalion of trading spouses. Another advantage out of these webs will be the proviso of hive awaying feasible information on the webs, so that authorised spouses can straight entree them without reaching the other parties. This will assist in increasing efficiencies of concern minutess in footings of clip and costs.

1.2. Statement OF THE PROBLEM

E-banking has entered the Pakistan economic system in a large manner but, sing the province of development of banking industry in the state and the client-base, there are uncertainties about the public-service corporation and cost-effectiveness of this manner of banking. The research survey will analyze these points and give recommendations on the topic:

1. An rating, theoretically and practically, of the advancement of Bankss which adopted electronic operations, and the prospective function for Bankss in the hereafter.

2. Discoursing jobs confronting Bankss in the range of electronic banking operations.

3. Stipulating the construct of electronic Bankss.


Following aims have been set Forth in behavior of the research:

* To familiarize public with the topic of ELECTRONIC BANKING, heighten their acuteness to stay au courant to the techniques, and modern tendencies of efficient banking.

* To bring on healthy patterns in banking concern and profession and to rede suited steps for their accomplishment.

* To promote and supply Electronic Banking information and to offer instruction through research study contents to pupils and accordingly to national fiscal establishments.

* To publish and print the study for proviso to all who are interested in the issue of Electronic Banking.

* To analyze Electronic Banking patterns of different Bankss in Pakistan.

1.4. Significance OF THE STUDY

E-banking is playing an of import function non merely in the development of electronic services in the first universe states but besides in the underdeveloped states excessively. Due to promotions in scientific disciplines and engineering, many foreign Bankss started offering Electronic Banking services in Pakistan. Electronic Banking offers enormous chances and saves cost and clip for both Bankss and clients.

This survey will measure the electronic public presentation of Bankss. This study emphasizes the fact that online handiness, consciousness, attitude towards alteration, computing machine and Internet entree costs, trust in one ‘s bank, security concerns, easiness of usage and convenience are the major factors impacting the acceptance of Internet bank services in Pakistan.


Scope of the survey:

The research thesis covers the taking Bankss in Pakistan that have entered the e-banking epoch and analyze its economic sciences. The major restriction of the survey is that the concerned Bankss are loath to unwrap information with respect to costs incurred on E- banking.

Restrictions of the survey:

As the E-banking in Pakistan is at the debut phase and its efficaciousness is yet to be tested, equal literature on the topic is non available.

Furthermore, the subject under survey requires comprehensive research, which is possible if more clip is allotted for the undertaking.

Banks forces are loath to give information about Bankss electronic procedure and jobs faced by Bankss.


Literature study is conducted in order to acquire more penetration into the survey. Literature study consists of past surveies related to this subject. Which will assist and guarantee that no of import information related to the survey is omitted. It includes largely domestic surveies conducted by our ain bookmans.


Yoshio, ( 1999 ) , states that Malayan banking sector started in the 1970 ‘s. However, the first seeable signifier of electronic invention in the Malayan banking industry was the debut of Automated Teller Machines ( ATMs ) in 1981. The ATMs to a big extent released Bankss from the restraints of clip and geographical location.

Then in the early 1990 ‘s, Tele-banking was introduced in Malaysia, which provided yet another bringing channel for subdivision fiscal services via telecommunications devices connected to an machine-controlled system of the bank by using Automated Voice Response ( AVR ) Technology.

Utsuml, on June 1, ( 2000 ) , said that the Malayan Central Bank gave the green visible radiation for locally owned commercial Bankss to offer Internet banking services. On June 15, 2000, Maybank, the largest domestic bank in footings of assets every bit good as web distribution, hypertext transfer protocol: //www.arraydev.com/commerce/jibc/www.maybank2U.com became the first bank to offer Internet banking services in Malaysia. This service is presently provided to single clients of the bank and the site self-praises of the latest 128-bit encoding engineering to still frights of security among consumers. The services provided in this portal include banking enquiry maps, measure payment, recognition card payment, financess transfer, and histories drumhead every bit good as dealing history. Customer support service is provided via electronic mails every bit good as via telephone lines and is available daily from 6 am to 12 mid-night.

JoseE , ( 2000 ) , said that the Hong Leong Bank commenced its Internet banking operations known as ‘e-Banking ‘ , which can be accessed via their web site at hypertext transfer protocol: //www.arraydev.com/commerce/jibc/www.hlbb.hongleong.com.my in December 2000. In add-on to supplying services that were antecedently included in their Telephone banking service, they besides offer options of measuring account dealing history in their ‘e-banking ‘ . They excessively provide support services via e-mails and telephones from 7 am to 11.00 autopsy, seven yearss a hebdomad.

Al-Jasser, ( 1999 ) , states that both the competitory forces every bit good as the expected benefits are doing concentration and enlargement of E-banking services in the state ( Saudi Arabia ) . However, in the long tally it would be the existent benefits which the Bankss would recognize in footings of higher net incomes through decrease in intermediary costs and expanded consumer base due to improved services on a cost effectual mode that would find the function of E-banking in the state ‘s banking sector. E banking is expected to play an of import function in incorporating the fiscal markets of Saudi Arabia globally and Bankss would finally capitalise on these developments.

Figures, ( 2000 ) , states that E-banking Automate critical banking activities and interact electronically with bank with comprehensive tools that help cut down administrative costs, increase productiveness, and better hard currency management—in a security-enhanced environment.

2.2. LOCAL Scenario

Mashhood, ( 2000 ) , states that the function of information engineering in fiscal services is to back up operational efficiencies, facilitate client services, mange hazard and support in decision-making. In the IT policy on fiscal services, the authorities of Pakistan has asked the State Bank of Pakistan to let gap of cyberspace merchandiser histories to enable inter-bank electronic fund transportation, to re-engineer procedures of foreign trade subdivisions, to accept e-orders of value less than $ 500, to open an e-commerce wing in fiscal establishments, and to ease glade and e-reporting in al Bankss. The e-commerce action programs for the fiscal sector have been established as per waies from the authorities. The program is to link subdivisions of 25 local and foreign Bankss in 12 major metropoliss. In stage I, subdivisions in one metropolis will be linked with their caput office. In stage II, all these Bankss and other fiscal establishments will be connected together. In stage III, private and public sector stakeholders will be linked and finally e-commerce web will include fiscal, trade and imposts webs along with their international links.

Ziauddin, ( 1998 ) , states that In Pakistan, immense investings, repeating costs, and absence of economic systems of graduated table are some of the major constrictions to put in on-line banking. One other job is that merely a few foreign Bankss are linked with their subdivisions, otherwise all major fiscal establishments work in isolation.

AL-Bader, ( 1999 ) , said that in the absence of a centralised database linked to subdivisions, Bankss do non merely necessitate the communicating package to ease communicating, but besides require modems, routers, accountants, etc. irrespective of the volume of minutess, be it little or monolithic, immense investings are required to ease on-line banking. Not merely the capital investings introduction besides the recurring costs, such as rental payments to PTCL, ongoing care costs, etc, are detering national Bankss to put.

Giasuddin, ( 2003 ) said that there is a demand to set up inter-branch and inter-bank webs so that all fiscal establishments may be linked together to ease electronic payment systems, which are among basic requirements for constitution of the fiscal substructure for e-commerce development. The following measure that is still non clear in Pakistan is the type of electronic payment systems and digital currencies to be used in Pakistan. There are a batch of different methods of payment that are available globally. Pakistan has to carefully make up one’s mind the most executable payment systems that can easy carry through fiscal demands, every bit good as, provide plenty assurance to the purchasers and merchandisers for safety and security of such payments.

Kazmi, ( 2000 ) , said that there is an pressing demand in Pakistan for set uping value added webs for fiscal minutess. Without these webs, it will be hard for concern and fiscal establishments to supply EC solutions with high quality and low costs.

Zaidi, ( 2003 ) , states that there is a demand to set up inter-branch and inter-bank webs so that all fiscal establishments may be linked together to ease electronic payment systems, which are among basic requirements for constitution of the fiscal substructure for e-commerce development. The following measure that is still non clear in Pakistan is the type of electronic payment systems and digital currencies to be used in Pakistan.

Shabbir, ( 2003 ) , said that both the competitory forces every bit good as the expected benefits are doing concentration and enlargement of E-banking services in the state. However, in the long tally it would be the existent benefits which the Bankss would recognize in footings of higher net incomes through decrease in intermediary costs and expanded consumer base due to improved services on a cost effectual mode that would find the function of E-banking in the state ‘s banking sector. E-banking is expected to play and of import function in incorporating the fiscal markets of Pakistan globally and Bankss would finally capitalise on these developments.

Naveed, ( 2003 ) states that Credit cards are chiefly used as convenient payment merchandises and at times a recognition installation for short term demands. The State Bank of Pakistan is playing a pro-active function in advancing acceptance of technology-based solutions in the banking sector and back uping services based on E-Banking. E-Banking has already taken off in this state and the recent launch by Habib Bank- one of the largest Bankss in the state – has provided a major discovery. so the inquiry is non when the installations will be provided but how quickly these installations will spread out. Attempts in this way are focused upon following countries:

* Creation of a robust legal substructure catering to the demands of E-Banking and other payments systems affecting electronic colony of financess. Key measure in this way was the announcement of Electronic Transactions Ordinance 2002, which provides legal acknowledgment to digital signatures and certification cut downing the hazards associated with the usage of electronic medium of concern. State bank is presently engaged in an exercising to further augment the legal model for electronic colony of minutess in the banking sector.

* Establishing of Payment Systems Development Committee in which commercial Bankss are members, to steer the development of payment systems in Pakistan.

* Creation of a dedicated Payment Systems Department in the State Bank covering with all issues refering to payment systems including E-Banking.

* Creation of a Real Time Gross Settlement System ( RTGS ) supplying an E-Banking solution to Bankss keeping their histories with standard runing process ( SOP ) whereby they will be able to run these histories from their ain premises via an electronic connexion with the State Banks ain waiters.

* Commercial Bankss have been allowed to open and run Internet Merchant Accounts.

* Banks are being encouraged to spread out the ATMs web through more engagement and a wider web of machines all across the state. all Bankss have been asked to fall in a SWITCH and interconnectedness between the 2 bing SWITCHES is being encouraged for farther development of the electronic substructure.

* State Bank has already acquired SWIFT connexion and has besides made it compulsory for Bankss to get SWIFT connectivity for colony of all cross boundary line fiscal minutess.

* Expansion of automated checks uncluttering services to all major metropoliss in the state is actively being pursued. The use of fictile money such as Credit/Debit cards is doing good advancement

Ishrat, ( 2003 ) , states that debut of E-banking will better banking services chiefly in footings of the convenience of the clients including, topographic point, clip and monetary value, the Bankss will be able to supply improved services and, accordingly, the quality and accomplishments of banking staff will besides better. Although many banking services will be available 24 hours, the demand for over the counter services will stay and Bankss would go on to supply normal services during office banking hours in Pakistan besides like in the developed states where E -banking is prevailing, it has been observed that clients feel much confident in utilizing e-banking services when they can tie in it with brick and howitzer subdivisions. Strictly on-line banking without physical subdivision web has non made much headroom even in developed states. In Pakistan, with low rates of literacy the bulk of clients will go on to utilize the 9-5 bank subdivisions.

Rizvi, ( 1999 ) , states that the province bank of Pakistan has constituted assorted commissions such as the Payment Systems Development Committee and the ECH undertaking force for the development of engineering based banking services in the state. Besides other affairs, these commissions besides oversee the developments in the countries of E-banking. State Bank of Pakistan co-ordinates closely with other bureaus such as the Ministry of Science & A ; Technology ( MoST ) , in enterprises associating to E-banking.

Shirazi, ( 2001 ) , said that the hereafter of vitamin E banking is really bright in Pakistan. Many Bankss in Pakistan have started supplying e-banking installations to their consumers. Over 300 Standard atmospheres are in operation in Pakistan the usage of ATMs is quickly increasing. More and more installations are being provided by the Bankss electronically including e-statements, financess transfer, measure payment for public-service corporations every bit good as other purchases. By 2002, about 40 % of the bank subdivisions have been automated and it is expected that this proportion will make 50 % by 2004. The rate of addition is phenomenal i.e. about 318 % . Similarly, the figure of on-line subdivisions has doubled during the last 2 old ages to 570 and by 2004 this figure will leap to 1356, stand foring an addition of 376 % . This enlargement along with the turning incursion of cyberspace will convey E-banking to more and more of their clients both in footings of Numberss every bit good as geographical locations.

Mahmood, ( 2003 ) , provinces in order to run into E-banking challenges that State Bank of Pakistan established the ECH Task Force under the leading of Mr. Naveed A Khan

( Country Representative – ABN AMRO Bank ) to ease the development and execution of E-Banking sector to advance E-Commerce. This Task Force was constituted to ease in be aftering & A ; debut of enabling engineerings in the fiscal sector of the economic system holding a direct bearing on E-commerce. The ECH Task Force is constituted of assorted dedicated professionals from the major fiscal establishments of the state who enrich the Task Force with their experience and expertness with a steadfast committedness to develop and advance E-Commerce in Pakistan.

Ahmed, ( 2001 ) , states that Electronic Commerce ( E-Commerce ) is merely another concern tool, one that enhances concern efficiency and effectivity and allows cost decrease. It is a vehicle to transport out business-to-business ( B2B ) or business-to-consumer ( B2C ) minutess. For fiscal establishments and enterprisers, E-Commerce non merely makes old procedures work better ; it besides provides a agency to interrupt with tradition and make new ways of making concern. E-commerce has a batch of possible in Pakistan where thoughts are rich, resources and labour are inexpensive, craft is first-class, entrepreneurial accomplishment in copiousness, and there is a big presence of autochthonal and globally appreciated artifacts other tradable goods. However, on a more realistic side, we have a batch of land to cover before we can harvest the benefits of E-Commerce and turn our economic system about. These are proficient every bit good as administrative challenges that have to be met and above all we need the basic substructure, which facilitates and promotes merchandising through electronic agencies.


This chapter presents the basic methodological analysis required in research. It includes the methods of hunt, type of survey and the beginnings of informations.


The methodological analysis of survey includes the different methods that research worker has used to make to the decision. But due to shortage of clip the research worker has tried his best to do this study informative, utile and besides good for others. The research worker has besides gathered a batch of information to cover all types of facets related to mechanization and electronic informations processing.

In this study the research worker has covered foremost of all the debut of electronic banking, its background, what installations and benefits it provide and what is its range in Pakistan? Second the research worker has visited few of the Bankss offering electronic services. They were really knowing to the research worker fundamentally in explicating their range in Pakistan.

3.2. Type OF THE STUDY

The survey is descriptive because the purpose is to research the bing values given in job statement. Descriptive procedure was believed to be more suited in this sort of probe because it seeks direct response from respondents. This process has been used in many countries of probes in many Fieldss of faculty members and scientific subject.


The end of the descriptive survey, here is to offer a people or to depict relevant facets of the phenomena of involvement to the research worker from an person, organisational, industry oriented, or other position ( Sekran, 2000, p.225 ) . Descriptive survey is the procedure of research that presents the informations in meaningful signifier, therefore aid to ;

§ Think consistently about the facets in a given state of affairs

§ Offer thoughts about future investigation and research

§ Help do simple determinations.


The secondary information has been chiefly complied from assorted books, diaries, articles, magazines and newspapers. Some secondary beginnings of informations are statistical bulletins, authorities publications and information published or unpublished and available from old research, instance survey and library records, on line informations, Webster and internet hunt. ( Sekran, 1996, pp.57 ) . The literature study has been documented from published and unpublished work. The analysis of secondary information is a utile scheme for larning the research procedure.

The research worker besides visited the IT departments of Bankss under survey for aggregation of related informations.


4.1. Analysis

Much has been written on the factors impacting acceptance or use of new merchandises and services. Some of the major psychological and behavioural factors which affect the acceptance of any new invention such as E- banking includes, consumer consciousness, easiness of usage, security, handiness, techno- phobic disorder, or merely reluctance to alter, penchant for individualized services and cost of following the invention.

One of the more of import features for acceptance or credence of any advanced service or merchandise is the creative activity of consciousness among the consumers of the merchandise or service. Some economic experts asserted that consumers go through a series of procedure in cognition, strong belief, determination and verification before they are ready to follow a merchandise or service and the acceptance or rejection of the invention begins when the consumer becomes cognizant of the merchandise.

Another of import factor impacting the credence and acceptance of invention is the degree of security or hazard associated with it. Even in states where E-banking has long been established, one of the most of import factors decelerating advancement of this new invention is the consumers concern for security of online fiscal minutess.

In add-on, e – bank clients would besides be funny to happen out how the Bankss would by and large cover with erroneous minutess happening in on-line minutess. Will the load of cogent evidence be on the clients or the Bankss would be willing to settle the issue up front and look into the job subsequently. The component of trust in this context would find the security of transacting for consumers by and large and find the acceptableness rate of this alternate bringing channel in the long tally.

Another factor that would stand in the manner of consumer acceptance of E-banking is the cost factor. In E-banking, two types of costs are involved. First, the normal costs associated with online entree fees and connexion charges and secondly the bank fees and charges. If consumers are to utilize new engineerings, the engineerings must be moderately priced relation to options. Otherwise, the credence of the new engineering may non be feasible from the point of view of the consumer.

Reluctance to alter is besides another factor that affects acceptance because the bing manner of service or merchandise bringing fulfils the client ‘s demands adequately. In the context of E-banking, telephone banking and howitzer subdivisions are the bing alternate manners of transacting banking concern. For clients to alter their present ways of operating and to take up new engineering, it must “ carry through a specific demand ” . Unless such a demand is fulfilled, consumers may non be prepared to alter from the present ways of operating. Many ways can be introduced to get the better of the reluctance to alter. Provision of individualized client service forces to help consumers in executing minutess via the Internet every bit good as supplying specific value added service, which are presently non provided through traditional banking channels can besides assist to cut down the clients reluctance to alter.

Some consumers have by and large been afraid of new engineering. These consumers may non hold the cognition or know-how in covering with computing machines specifically and therefore trust human existences more than computing machines and machines. Their fright for computing machines and engineering by and large grows and finally develops into a phobic disorder for engineering. Thus, engineering phobic disorder can besides be a factor impacting the clients ‘ reluctance to choose for E- banking.



Different Bankss besides offer services for their clients for transportation of financess electronically. These options nevertheless have one major defect in them ; “the security threat” . Many instances of cyber frauds and stolen recognition Numberss have lead to a fright in the consumers. But the advantages of E- Commerce are excessively many for the client itself that they offset the menace of cyber fraud. However, this is an country of concern for both the consumer and the concerns so both are working in this respect to extinguish any signifier of security menace.

By and large, the E-Payment mechanisms can be divided into four wide classs harmonizing to research:

1 ) Credit/Debit Card games

2 ) Digital Money

3 ) Smart Cards

4 ) Agreements by different Banks

1: Credit/Debit Card games

The usage of recognition cards and debit cards was stretched beyond the conventional shopping in this epoch of Information Technology. Today recognition cards are besides used for shopping online by the end-consumers. Normally, the different web sites making concerns accept the most normally used Visa and MasterCard for shopping online. It may be deserving adverting here that this is a payment mechanism for B2C type minutess. This is the most widely used method of payment for B2C minutess. The marketer web site asks for the recognition card figure along with the termination day of the month of the recognition card and therefore the payment takes topographic point.

Harmonizing to the figure chiefly three parties are involved in the credit/debit card payment method. First, the client visits the web site and purchases the merchandise. After the use of credit/debit card the website sends the card figure and confirmation to the merchandiser bank which after confirmation, transfers the specified sum of money to the history of the web site in the average clip the website sends the sold merchandise to the client who gets the measure at the terminal of the month from the merchandiser bank.

This manner of payment mechanism is non really secured. There is ever a menace of a escape of credit/debit card figure while the dealing is in advancement. This has caused a batch of contention, as many hackers and recognition card operators have been known to utilize stolen recognition card Numberss to shop online. The lone manner of security for this is the firewalls, which a skilled hacker can go through with some or possibly no trouble. Till this day of the month many online frauds have happened due to this payment mechanism in which the individual with the stolen recognition cards have done shopping online from some distant portion of the universe and the cost of making that individual has known to be more than the monetary value of the merchandise itself. In this respect another manner of security could be the trailing of IP references. IP addresses or Internet Protocol references are alone references for every Internet user all across the universe. What the web sites can make is they can track the IP reference of the on-line shopper at the clip of dealing and so if it is known to be a fraud afterwards they can track that individual through this IP reference. But for this to go on a really high degree cooperation on the planetary graduated table is needed.

A batch of companies have been working to supply security for the online purchases through Credit/Debit cards. Cyber Cash is one of them.

2: Cyber Cash

Cyber Cash is a well-established mechanism for payment of goods and services on the Internet. Cyber Cash besides supports little dealing sizes, leting sites to follow a micro electronic commercialism theoretical account of payment for goods and services. Cyber Cash gives consumers added benefits – they can take one of three payment mechanisms. Cyber Cash supports cheques, electronic hard currency, or recognition card minutess. Cyber Cash has a big bing client base, and poses a important menace to other electronic hard currency services that use the Internet for minutess.

To get down with, consumers will necessitate to download free Cyber Cash package from the Cyber-Cash ‘s Internet waiters. This package establishes the electronic nexus between consumers, merchandisers and their Bankss every bit good as between persons. Once monetary value has been negotiated and the consumer is ready to buy, the consumer merely clicks on the Cyber Cash “Pay” button displayed conspicuously on the merchandiser ‘s shopfront, which invokes the Cyber Cash package. The merchandiser sends the consumer an on-line bill detailing the purchase information together with a statement corroborating the sum charges. When the statement appears on the screen, the consumer adds to it his or her recognition card figure, name as it appears on the card and an termination day of the month. The client besides has the option of utilizing a debit service to do the purchase. In this instance, the client merely adds the personal designation figure ( PIN ) to the merchandiser ‘s on-line bill.

This statement information is so encrypted and passed along with the bill to the merchandiser, which adds designation and forwards all information to the Cyber Cash waiter. There the Cyber Cash waiter initiates a standard recognition card or debit card mandate petition to the merchandiser ‘s bank or bank-designated processing centre. When the mandate petition has been processed, the Cyber Cash waiter forwards a response to the merchandiser. The merchandiser so completes the dealing. The Cyber Cash waiter besides supports related operations such as charge, nothingness or return. Cyber Cash will bear down Banks/processors fees for consumer to merchant minutess, every bit good as minutess between persons will be competitory with the cost of a postage cast.

3: Digital Money

This is really a piece of information with intrinsic value that is stored on an person ‘s personal computing machine ‘s ( Personal computer ) difficult thrust or in an electronic billfold and could be used to do online purchases. It can besides be transferred from a Personal computer to a smart card for usage off-line. The information ( digital money ) is downloaded over telephone lines, Personal computers, or dedicated terminuss to be traded online over computing machine webs like the Internet. Digital hard currency has no value outside of the histories to which it was tied, doing fraud rather hard. Some signifiers of e-cash, like that from DigiCash, Inc. , are anon. ; their Digital hard currency can non be traced back to the user, an property of traditional currency. In add-on to DigiCash, Cyber Cash, Visa, and MasterCard, had developed their ain signifiers of digital money.

4: Smart Card games

A smart card is a piece of plastic, the same size as a recognition or debit card, with a Si bit embedded in it. The bit contains a microprocessor, a illumination computing machine that can execute computations and shop informations in its memory.

The card is “ smart ” because it is “ active ” , that is it can have information, procedure it and so “ make a determination ” . For illustration, when a smart card is inserted in a terminus, the terminal sends its “ signature ” to the microprocessor. If the “ signature ” agrees with the bing parametric quantities in the microprocessor ‘s memory, so the memory files are opened and the informations made seeable to the terminus. In the same manner, the card sends its “ signature ” to the terminus and the terminus ‘s microprocessor verifies it. This common confirmation is done “ off-line ” : this means that the terminus is non connected to the system ‘s cardinal computing machine, known as the “ host ” .

The confirmation procedure typically takes a fraction of a 2nd. In add-on to digital signatures, Personal Identification Numbers ( PINs ) and hand-written signatures can be used.

A ) Smart Card Uses

a ) Electronic Bag:

Normally issued by Bankss, these electronic payment cards allow cardholders to avoid the fuss of happening right alteration by lading value from their bank histories into an electronic bag ( “ e-purse ” ) which can so be used to pay for small-value mundane purchases at stores, peddling machines, conveyance ticket machines, parking metres, public payphones etc.

B ) Secure Internet Payments:

Smart cards offer the secure means of payment over the Internet, which consumers are demanding as the e-commerce roar continues. The acceptance of common criterions by issuers will take to international interoperability of cards, so that payments can be made across national boundary lines.

degree Celsius ) Automatic Public Transport Fare Collection:

Contact less smart cards have been adopted by public conveyance operators in many big urban sprawls. The Proton smart card engineering can be added to these cards to place cardholders for price reduction menus, or to let purchase of more electronic tickets with an e-purse.

B ) Benefits of Smart Cards

a ) For cardholders:

Smart cards are convenient and offer a scope of added-value services, that can be tailored to single demands and that can be used on the Internet.

B ) For merchandisers:

Smart cards cut down the hazard of fraud, the costs associated with hard currency handling and telephone costs linked to online mandate, every bit good as offering chances to add applications such as trueness strategies and giving a futuristic image to their concerns.

degree Celsiuss ) For card issuers:

Smart cards greatly cut down costs associated with fraud, they enable excess added-value services to be offered to clients, making gross and closer client relationships and their off-line minutess, free infinite on webs for other online activities.

Automated Teller Machine ( ATM )

In the modern epoch we have observed that machines have replaced adult male in many Fieldss. They are non merely faster, but have besides proved to be more dependable and propitious. It could possibly been merely a fabricated phantasy to be holding a device which could pull and lodge hard currency by the shot of a finger a twosome of decennaries back. With the promotion of computing machine engineering we have such machines, which offer us these services, known as ATM ( automated teller machine ) .

These machines had made banking a batch easier and simpler for the clients every bit good as the Bankss. Customers can retreat hard currency at any clip from these machines by infixing a card and PIN Code. These machines can be stand-alone every bit good as portion of a web, and such a web is known as an ATM web.

The ATM communicates through a host processor. The host processor can back up either leased lines or dial-up ATMs. Leased line machines connect straight to the host processor ( of the specific bank/service supplier ) , through a four wire, point-to-point, dedicated telephone line. Dial-up ATMs connect to the host processor through a normal phone line utilizing a modem ( modulator-demodulator ) and a toll-free figure.

The ATM forwards the dealing information to the Host Processor, this information is so forwarded to the Bank that issued the card, if the card holder petitions hard currency, the host processor initiates an electronic financess transfer to take topographic point from the clients look intoing history to the host processor ‘s history. The processor will so direct an blessing codification to the ATM authorising the machine to distribute the hard currency.


When the client inserts his ATM card in the ATM machine he is asked to come in his pin figure and the sum he requires along with the notes he wants. The client draws the money and receives it along with a reception. The client ‘s history is debited and the bank history is credited instantly. The information goes to the subdivision service and is updated. The same information, at the same clip, is updated in the caput office waiter.

After shuting the minutess are printed and reported clip and day of the month wise, sum wise and ATM wise. All these studies are given to the directors and transcripts are sent to relevant subdivisions.

Working of ATM after shuting

( Courtesy: Muslim Commercial Bank, Islamabad )

The chief difference between working hours and after shutting is that during the on the job hours the information is updated existent clip. After shutting of the subdivision, if a dealing is made, the information is straight updated in the caput office computing machine, which runs 24 hours a twenty-four hours. This information is stored till the following forenoon when the system of the subdivision is turned on and the information is updated in the subdivision waiter. This procedure is done in batch. The subdivision balances its histories before get downing its ATM systems once more.

4.3. The inside informations of Bankss: specific reading and analysis is given in the undermentioned paragraph:

Following are the four Bankss under survey which will assist to understand in deepness about the Electronic Banking scenario in Pakistan and the services being offered by these Bankss electronically: –

1. Abn-Amro bank

2. askari commercial bank

3. Muslim commercial bank

4. habib bank limited

4.3.1. Abn-Amro Bank

ABN AMRO Bank Pakistan was established in 1948 and was the first foreign bank to be granted a licence by the Government of Pakistan. Over the last five old ages, ABN AMRO has significantly enhanced its profile in Pakistan, and is ranked amongst the top 3 foreign Bankss in the domestic market. The Bank has strategically located subdivisions in three of the state ‘s chief concern centres: Karachi, Lahore and Islamabad.

Abn-Amro Bank Station

The Electronic Banking System offers equal security characteristics in all facets of system entree, minutess ‘ mandate, database security, transmittal and communicating every bit good as authenticating minutess and files. These capablenesss are good manifested by using different methods like utilizing user I/D and Passwords, specifying user ‘s privilege, utilizing built-in constitutional security characteristics from MS Access and Windows NT, indiscriminately generated dynamic MAC and DES key every bit good as utilizing Smart Card to foster the security. From the proof and security position, it will guarantee no renunciation of instructions at any one clip. Last in footings of the communicating point of view, information refering to in state will non flux out of the state except for cross-border information.

With a system that offers such tight security, it will be obvious that clients should hold full assurance in utilizing the system for originating minutess. This will profit in fast turnaround clip for minutess treating, more efficient in making payments direction and minimising mistakes therefore consequences in cost economy. Apart from merely originating payments, clients can hold entree to their planetary history information that helps to do fast and accurate concern determinations.

By presenting and stressing state-of-the-art engineering to the fiscal system, it will assist to hike the people ‘s assurance and at the same clip pull more investors into the state. This would consequences in the part to the stabilisation of the state ‘s economic system.

Businesss today depend greatly on ready entree to critical fiscal information in order to remain in front. ABN AMRO Electronic Banking System allows corporate clients to make their banking in the convenience of their ain offices and pass on straight with the assorted subdivisions of the bank. Many benefits can be derived in utilizing Electronic Banking both for the clients and the bank.

A ) Benefits to Customer

* Global history information is at the fingertips, so that client ‘s can do instant, accurate concern determinations.

* Investment chances can be maximized by monitoring and traveling financess into interest-bearing histories, clip sedimentations and nightlong money market.

* Customization to have demands to run into concern ends of bettering efficiency and cut downing costs.

* Easy integrating with bing back-office applications and system.

* Turnaround processing clip for minutess is much shorter.

* Through file integrating or pre-defined input, it increases truth and minimizes mistakes.

* Minutess can be created much faster.

B ) Benefits to Bank

* Increased efficiency by holding more consecutive through processing to the back-office system.

* Increased cross-sell chances.

* Reduce work load in operations as the degree of mechanization additions.

* Reduce cost.

4.3.2. Askari Commercial Bank, Ltd

Askari Commercial Bank Limited ( ACBL ) is a scheduled Bank runing under the licence of State Bank of Pakistan ( Central Bank of the Country ) . ACBL ‘s chief stockholders are Army Welfare Trust ( AWT ) .

ACBL has been rated A1+ for the short term and AA for the long term by the Pakistan Credit Rating Agency ( PACRA ) an affiliate of IBCA Ltd. , UK, and is merely Pakistani Bank in the private sector to voluntarily obtain this evaluation.

ACBL has adopted the policy of mechanization and debut of modern engineering, the aims of which are to keep efficiency, to cut down runing cost and to ease development of modern-day merchandises. ACBL offers advanced merchandises and services to its clients like 24 hours Automated Teller Machines, Telephone Banking and Automated Signature Verification System. All the ATMs and subdivisions in the major urban centres are linked through state-of-the-art Satellite based Communication System offering existent clip 24 hours service.

A ) Automated Teller Machine

ACBL installed its first ATM in January 1996 ; it is besides the first Pakistani bank to get down ATM sharing. The agreements with ABN AMRO Bank were made in 1999 and due to this ATM web sharing experience, Habib Bank Limited, besides proposed to fall in this web, and now this web is operational between all three Bankss. Presently this web consists of 61 ATMs.

About 44,000 clients of the bank hold ATM cards. Entire minutess carried out during the twelvemonth 2000 were 713,263 out which 430,241 were made through ATMs.

Askari Bank ‘s ATM service is known as the “ ASKCASH ” . It major 24 hours services are:

* Cash Withdrawal

* Deposit

* Balance Inquiry

* Fund transportation

* Utility measure payment

* Histories statement

* Change pin

B ) Communications

Online Banking without communicating is non possible. Communications includes the communications links between the Head Office and the subdivisions, which in the instance of Askari Bank is via a private orbiter based web.

In the Head Office, there are two types of web communications available – Wide Area Network communications between the Head Office and the Branches and a Local Area Network for internal Head Office computing machine communications. This is both efficient as it allows the use of a limited figure of computing machine resources by a big figure of computing machines, and it is besides convenient, as these really same computing machines can non merely pass on amongst themselves, but can besides be used as terminuss for the banking waiters.

The Askari Bank Branch Network has expanded to 28 subdivisions. All the ATM and Inter-branch Minutess are being processed through the private broad country communications web. It is hence indispensable that the web run around the clock. For this intent, the bank ‘s chief banking waiter and a backup have been installed in the Communications and Control Room. They both work at the same time, so, if any job occurs in one of the systems so the other one will automatically take-over and the web continues to work without any break.

Internet Banking at ACBL

Following services are linked to internet banking provided by Askari Bank: –

* Account Information

* Balance Inquiry

* Transportation of financess within the same subdivision


A ) Benefits to Bank

· Increases efficiency of bank by holding more straight- forward minutess.

* Reduces work burden

* Reduces over all costs associated to provide client demands.

B ) Benefits to Customers

· Consumers can utilize their computing machines and a telephone modem to dial in from place or any site where they have entree to a computing machine.

* The services are available seven yearss a hebdomad, 24 hours a twenty-four hours.

* Minutess are executed and confirmed rapidly, although non outright. Processing clip is comparable to that of an ATM dealing.

· And the scope of minutess available is reasonably wide.

4.3.3. Muslim Commercial bank, Ltd

MCB is in its over 50 old ages of operation has a web of over 1,200 subdivisions all over the state with concern constitutions in Bangladesh, Sri Lanka and Bahrain. The subdivision break-up state wise is Punjab ( 57 % ) , Sindh ( 21 % ) , NWFP ( 19 % ) and Baluchistan ( 3 % ) severally.

MCB focuses on three nucleus concerns viz. Corporate, Commercial and Consumer Banking. Corporate patronage includes public sector companies every bit good as big local and multi-national concerns. MCB is besides providing to the turning in-between category by supplying new plus and liability merchandises

Automated Teller Machine

The subdivision provides 24 hr banking convenience with the largest ATM web in Pakistan covering 9 metropoliss with 80 ATM locations. The MCB automated Teller machine launched in 1995 is a agency of supplying clients with 24 hr hard currency convenience.

With the MCB ATM 24 hr hard currency card MCB client can:

* Access 80 ATM machines in 11 major metropoliss in Pakistan

* Select between two linguistic communications Urdu/English for the one screen dealing

* Withdraw hard currency

* Contact 24 hr MCB ATM aid line

These are Spanish made NCR ATMs, but now the Bank plans to replace these ATMs with new IBM ATMs, which have following enhanced characteristics

* Multi Currency backdown

* Sound Oriented

* Touch Screen system

* Printer installation for Bank statement

The Bank is presently utilizing PTCL leased lines for online Banking and ATMs.

MCB Call Center ( Telephony Banking )

Customer has to dial MCB ‘s Call Center from his/her place or office or wherever he/she happens to be. It offers basic banking services for client ‘s convenience, extinguishing the demand for a client to do unwanted trips to your subdivision.

A ) Services Available through MCB Call Center

ATM Servicess

* ATM Lost / Stolen Reporting

* ATM Transaction Details, History & A ; Ailments

Other Servicess

* Product Information ( receive inside informations through facsimile, SMS or e-mail -registered users )

* ATM Locator ( receive inside informations through facsimile, SMS or e-mail -registered users )

* Branch Locator ( receive inside informations through facsimile, SMS or e-mail -registered users )

· Tele-banking Services Management i.e. TPIN alteration, Block / Unblock service.

Intranet for Corporate Customers

Muslim Commercial Bank besides offers Intranet installation for its corporate clients. To transport out minutess, the corporate client connects to the official web site of bank. On the web site there is a nexus for Intranet clients. The client logs on to Intranet by giving user name and watchword. Each client is given a specific name and PIN or watchword that is ever kept confidential. Corporate clients can look into their balances any clip, they can transport out transportations to other histories and all kind of minutess without traveling to the bank. This installation gives corporate clients the advantage to look into their balance at any clip of the twenty-four hours. The corporate clients holding offices where there is no M.C.B subdivision can efficaciously utilize this installation to transport out assorted dealing operations.

4.3.4. Habib Bank, Ltd

Today, HBL has more than 1,700 subdivisions all over Pakistan and presence in 26 states across five continents. HBL introduced merchandises such as Credit Cards, ATMs, Travelers Cheques, etc. , to the Pakistani market.

Electronic Banking Scenario at Habib Bank, Ltd

Although Habib Bank is offering ATM services but when it is compared with other foreign and private Bankss in footings of other technological services, it is found that Habib

Bank is dawdling far behind. This can be due to its wholly different patronages and besides due to big operations and above all can be because it is a authorities owned bank.

Whatever the jobs may be, it is understood that to last in today ‘s ferocious competition of banking industry, one must come up with advanced merchandises and offerings.

Finally Habib bank has come up with a E-Banking service which is described below: –

Habib Bank ON-LINE Easy Access

This method of On-Line banking has connected 65 subdivisions state broad. The services that are being offered by this are:

* Inter-branch dealing

* Cash transportation

* With-drawls

* Deposits

5.1. Decision

Electronic-Banking is basically planetary in both construct and realisation. Millions of persons and companies, around the universe, are already transacting by utilizing advanced electronic banking engineerings. E- Banking is non a futuristic dream. It is go oning now and it is go oning fast, with many well-established success narratives and illustrations.

This study emphasizes the fact that online handiness, consciousness, attitude towards alteration, computing machine and Internet entree costs, trust in one ‘s bank, security concerns, easiness of usage and convenience are the major factors impacting the acceptance of Internet bank services in Pakistan

The impact of E- banking will be permeant, both on companies and on society as a whole. Banking that choose to see it merely as an “ attention deficit disorder on ” to their bing ways of making concern will derive merely limited benefit. For those Bankss that are willing to alter their organisations and concern procedures to to the full work its possible, e- banking offers the possibility of breakpoint alterations. All the Bankss, including those that try to disregard the new engineerings, will so be impacted by these alterations in markets and client outlooks.

Banks, wishing to fall in the E-banking, could continually analyze the hazards and chances created by electronic banking. Their information engineering divisions must fix enabling capablenesss and engineerings.

Evidence besides indicates that there are greater promotional attempts on the portion of Bankss to make greater consciousness of E-banking and its benefits is of import for the success of Internet banking services backing.

In Pakistan Electronic Banking is still in its early phase. From the research it is found that about all the foreign and private Bankss possess the engineering to offer new and advanced electronic banking services. But the job is consumer adaptability to th


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