Popularising internet banking

Modern banking offers different modes of transactions that include ATM payment, mobile banking, internet banking etc. Among these, Though ATM and mobile banking have gained enormous popularity among all types of clients, internet banking still lags behind.
Banks can provide services like utility bill payment, credit card bill payment, payment of loan installments, insurance premium payment etc. to their customers through internet banking.
The Central Bank has tightened the security of the National Payment Switch Bangladesh (NPSB) adapting international standards and best practices for card based payments.
A safe, secure and efficient retail payment system always involves active participation from all stakeholders. Ignorance of general clients and concerns over cyber security are the main reasons for the slow growth of the internet banking but in spite of that internet banking is gaining popularity day by day. Present overview of internet banking is given below:
* 40 out of 57 scheduled commercial banks in Bangladesh offer internet banking facilities.
* Out of the 53 banks, 51 have card businesses and they are member of the National payment switch Bangladesh (NPSB).
* NPSB is also processing Internet Banking Fund Transfer (IBFT) transactions for 6 banks.
* As on October 2017, the number of internet banking rose to 1.7 million.
* Out of all the state-owned commercial banks including the specialised banks, the rate of internet banking users is almost zero per cent.
* 90 per cent of the users are from private commercial banks (PCBs) and the remaining are from foreign commercial banks (FCBs).
* The City Bank Limited, Eastern Bank Limited, Mutual Trust Bank Limited and the Standard Chartered Bank have maximum shares of the internet banking customers. These banks already have introduced their own mobile banking apps which made internet banking more accessible and easier.
* Users are allowed to make five transactions per day with a limit of up to Tk. 0.2 million every day.
* Customers can transfer up to Tk. 0.5 in a single transaction through NPSB.
* From October, 2017 to November 2017, internet banking transactions increased by Tk. 1636 million (7.2 per cent). The amount was Tk. 24282 million in November'17.
* In the same period transactions increased by Tk. 236 million (3.4 per cent) in PCBs and Tk.1400 million (8.9 per cent) in FCBs. But there was no such transactions in state owned banks and specialised banks till November'17.
* Most of the clients used internet banking for making 'fund transfer'.
* Fees for using internet banking are very low as customers have to pay maximum Tk. 300 annually for the service.
But there are some downsides also. High bandwidth price and cyber security are two biggest obstacles for the growth of this service. Although mobile phone penetration has increased widely but the number of smartphone users have not grown to the expected level. Recently, 4G has been introduced in our country and government has target to reduce the price of bandwidth in the near future. Besides, number of the smartphone users is on the rise which will encourage the banking industry to focus more on internet banking. If cyber security can be ensured, internet banking will get more popularity among all types of clients.

Shamim Iqbal is a research analyst at the First Security Islami Bank Limited.
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