Most banks not yet ready for e-commerce, online payment
Saturday, 14 November 2009
Mehdi Musharraf Bhuiyan
A week after Bangladesh Bank jump-started e-commerce and online payment system in the country; local IT giants and their banking counterparts remain sceptical about its immediate feasibility and long-term security implications.
Industry insiders are all but convinced that at least two thirds of the country's banking institutions are not ready to comply with Bangladesh Bank's latest directive towards e-payment and money transferring scheme and are not set to be prepared for the rapid shift within the next two years.
The central bank in a circular issued on November 2 asked all the commercial banks to introduce online payment systems facilitating fund transfers and payment of utility bills on the internet while permitting the credit card transaction in local currency.
It has also been reported that the banks have been given a timeframe of six to eight months to comply with these new set of directives as they are expected to be operational by the start of the next fiscal year.
The move has been perceived by some quarters to be a great leap forward towards the introduction of e-commerce in the country, which has been thought to revolutionise the country's banking as well as IT sector.
However, local IT giants with extensive experience in banking automation are not so enthusiastic, warning that the actual path towards full scale e-commerce might prove difficult than thought before and in the long run may result in 'digital divide' within the country's banking scenario.
They said that apart from a handful of top multinational and local financiers, the new directives are likely to be a burden for majority of the country's banks and financial institutions due to lack of adequate infrastructure and regulatory framework.
"What our experience shows is that it takes at least 24 months to make an average bank ready for true Internet banking", said M Manjur Mahmud, Chief Executive Officer of Data Soft, a leading IT company with extensive experience in banking automation.
"Available data and statistics also suggest that that around eighty per cent of the country's banks are not equipped enough at the moment for this rapid change, " added Manjur, whose company has previously been involved in the automation of Dhaka and Chittagong customs houses, Chittagong port and RAJUK.
Leaders in the IT sector also reckoned that at the end of the day, the ultimate responsibility of building the adequate technological backbone would lie on the central bank itself to facilitate the necessary infrastructure
"It will require at least US$ 50 million of investment on the part of the Bangladesh Bank to build up the necessary backbone while the banks at individual level would require investment ranging between US$ 0.3-0.4 million," said an industry insider.
"However, the range of cost for the individual banks may vary depending on the vendor they choose," said S M Waesh, Executive Vice President of Flora Systems, the country's leading IT solution provider, which provides IT backbone to an array of leading commercial banks.
"If a bank chooses a local IT farm, the cost of such automation may not cross $ 1.0 million. But, if they instead employ a foreign firm, the cost may go up to $ 3.0 million".
"While, the shift may be easier for the private banks, government banks will find it more difficult to cope with the change due to their relatively backwardness in IT infrastructure, huge network and bureaucratic nature", said Shamsur Rahman Chowdhury, Head of IT in Exim Bank Limited.
With the central bank nod towards Internet banking, also has come the question of security in transaction, and whether the country's existing anti-money laundering law, supposed to govern the system is adequate to address the issue.
Although, industry insiders in general are optimistic that the rapid ride towards Internet banking and digitisation would create more jobs while helping flourish e-commerce activities in the country, there is also scepticism from some quarters that on the flip side, the latest move may also result in job shedding as some portion of the workforce may not be able to shift their skill according to the new demand.
A week after Bangladesh Bank jump-started e-commerce and online payment system in the country; local IT giants and their banking counterparts remain sceptical about its immediate feasibility and long-term security implications.
Industry insiders are all but convinced that at least two thirds of the country's banking institutions are not ready to comply with Bangladesh Bank's latest directive towards e-payment and money transferring scheme and are not set to be prepared for the rapid shift within the next two years.
The central bank in a circular issued on November 2 asked all the commercial banks to introduce online payment systems facilitating fund transfers and payment of utility bills on the internet while permitting the credit card transaction in local currency.
It has also been reported that the banks have been given a timeframe of six to eight months to comply with these new set of directives as they are expected to be operational by the start of the next fiscal year.
The move has been perceived by some quarters to be a great leap forward towards the introduction of e-commerce in the country, which has been thought to revolutionise the country's banking as well as IT sector.
However, local IT giants with extensive experience in banking automation are not so enthusiastic, warning that the actual path towards full scale e-commerce might prove difficult than thought before and in the long run may result in 'digital divide' within the country's banking scenario.
They said that apart from a handful of top multinational and local financiers, the new directives are likely to be a burden for majority of the country's banks and financial institutions due to lack of adequate infrastructure and regulatory framework.
"What our experience shows is that it takes at least 24 months to make an average bank ready for true Internet banking", said M Manjur Mahmud, Chief Executive Officer of Data Soft, a leading IT company with extensive experience in banking automation.
"Available data and statistics also suggest that that around eighty per cent of the country's banks are not equipped enough at the moment for this rapid change, " added Manjur, whose company has previously been involved in the automation of Dhaka and Chittagong customs houses, Chittagong port and RAJUK.
Leaders in the IT sector also reckoned that at the end of the day, the ultimate responsibility of building the adequate technological backbone would lie on the central bank itself to facilitate the necessary infrastructure
"It will require at least US$ 50 million of investment on the part of the Bangladesh Bank to build up the necessary backbone while the banks at individual level would require investment ranging between US$ 0.3-0.4 million," said an industry insider.
"However, the range of cost for the individual banks may vary depending on the vendor they choose," said S M Waesh, Executive Vice President of Flora Systems, the country's leading IT solution provider, which provides IT backbone to an array of leading commercial banks.
"If a bank chooses a local IT farm, the cost of such automation may not cross $ 1.0 million. But, if they instead employ a foreign firm, the cost may go up to $ 3.0 million".
"While, the shift may be easier for the private banks, government banks will find it more difficult to cope with the change due to their relatively backwardness in IT infrastructure, huge network and bureaucratic nature", said Shamsur Rahman Chowdhury, Head of IT in Exim Bank Limited.
With the central bank nod towards Internet banking, also has come the question of security in transaction, and whether the country's existing anti-money laundering law, supposed to govern the system is adequate to address the issue.
Although, industry insiders in general are optimistic that the rapid ride towards Internet banking and digitisation would create more jobs while helping flourish e-commerce activities in the country, there is also scepticism from some quarters that on the flip side, the latest move may also result in job shedding as some portion of the workforce may not be able to shift their skill according to the new demand.