Changing in to global village

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Chapter 1

1 Introduction

With the rapid growth of information and communication technology (ICT) world is changing in to global village. Ultimate purpose of E-Readiness is to make a country ready in form of technology and its usage. Information and communication technology is contributing a lot in every sector of humanity. So there is no exemption for banking sector as well. The search for better living styles has buoyant man to ascertain and device more and more ways for developed life. Leaning towards paperless environment is off course transferring conventional banking into E-Banking along with many other reimbursements like it covers the barriers of space and geographical boundaries. E- Banking is also showing potential to be more capable for providing low cost operations and access to financial services distantly. E-Banking provides services to large population with no trouble. Now days E-Banking is offering services beyond the one's exceptions. Major examples are ATM's, internet banking, tele-banking and PC banking etc. In this research report, our efforts are to seize the indulgent of e-readiness in framework of e-banking in Pakistan. How banks are efficiently participating in practice of novel technologies and how much technologies are efficiently supporting banking tricks.

1.1 Background of E-Banking in Pakistan

Records show that in Pakistan first computer was purchased in mid of sixties and installed in Karachi [3]. Recently there are more than more than 1800 mainframes and mini computers and half of these are in government sector and there is 35% escalation over last 3 years [3]. Pakistan has tranquil the import policy and reduce duties on computer goods. Now Pakistan import about 450,000 computers every year [3]. This quantity is expected to boost up to 4-5 times in coming years. The expansion factor for Pakistan is good supremacy and calculated administration, financial stability, high agriculture capitulate, industrial energy, poverty alleviation and encouraged impact on foreign policy [3]. Here we see role of computer in this development factor is of extreme significance. Pakistan government is encouraging those policies which are good for information and communication technology. The developed countries are enjoying all flavors of E-Banking like USA, Hong Kong and Sweden but still its an budding issue in developing countries like Pakistan where there is no full grown established infrastructure for banking sector. Considering this point that E-Banking can play major role in the strategic growth of Pakistan State Bank of Pakistan is taking full care of E-Banking in Pakistan so that all banks make sure that E-Banking services are efficient and reachable. There are 49 banks in Pakistan where banking system has been predominately cash and cheques [1].

1.2 Problem addressed

Rapid invasion of technology and ecommerce over globe is giving hype to E-readiness potentials. E-readiness has different meaning for different people, in different frameworks for different purposes [2]. Basic purpose of E-readiness is to portray the past performance, present analysis and future predictions. E-readiness in context of E-Banking needs to understand in Pakistan. For this understanding of E-readiness, we need to acquire knowledge that how much banks are sound in using technology and acquiring new changes in technology because every country takes a look on this understanding and make estimation for future planning. Unfortunately banks in Pakistan have not been evaluated for effectiveness of E-readiness till now. Pakistan is facing lack of strategies and investments in this area. No one has explored this market of E-Banking opportunities in detail. We need to know how much E-Banking sector is sound and comprehensive in using ICT for better customer satisfaction and competition in market. E-readiness in framework of E-Banking in Pakistan can reveal future propensities. For this we need to gather data about E-Banking in Pakistan regarding technologies used and how efficiently this is used in banks.

There are many factors which are driving E-Banking in a country. These factors are infrastructure, services, social factors, and economic factors etc [2]. We need to underline those parameters which can influence E-Banking in Pakistan. We need to highlight those parameters which can influence E-Banking in Pakistan. The important issue is to provide E-Banking facilities to disadvantaged population by extending the infrastructure and social services to rural and remote areas [2].

1.3 Research question

The purpose if this research is to understand of E-readiness in context of E-banking in banking sector of Pakistan. The possible research question to get a hold of this understanding are

  • What are research dimensions for banking organizations for e-readiness of e-banking in Pakistan?

1.4 Scope of work

The purpose of this research is to analyze e-banking services provided by Pakistani banks. The scope of this research is limited to the banking sector of Pakistan. This research is limited to banking sector if Pakistan. This research work proposes research dimensions for e-readiness of e-banking in Pakistan. The understanding of e-readiness in context of e-banking will be helpful for bankers to make policies and strategies for future prospective of e-banking to gain competitive advantages. In one sentence the scope of this research is to explore the e-readiness of banks in Pakistan for e-banking services.

1.5 Objective of Research

The first objective of this research is to understand what is e-readiness and assessment of e-readiness for e-banking in Pakistan. The second objective of this research is to understand the essence if E-Banking and its services in Pakistan.

Chapter 2

2 Research Methodology

Novelties in the world are result of search and modern technology made the research easier than the old days. "Research is an organized, systematic, data based, critical, objective, scientific inquiry or investigation in specific problem undertaken with the purpose of finding answers of solutions undertaken with the purpose of finding answers or solutions to it"[21]. This chapter explains the methods of research that will be used in the research work.

2.1 Our research approach

Every approach has some goals to achieve in the research. Choice basically depends upon the problem in hand. E-Banking in Pakistan isn't developed because it is new archetype for Pakistani banks. The nature of our work is to explore this area to get to get what is current understanding of e-readiness in framework of E-Banking in Pakistan. The approach used here is exploratory. This exploratory research demands for data gathering about e-banking which we are collecting through questionnaire survey.

2.2 Surveys

Surveys are way of collecting information that may show overall performance of all group selected for research. This information may be about economic, social, cultural, geographical data or some scientific relationships. Survey is conducted to answer certain questions [5]. Surveys are a good way to collect information from large population. It is also a flexible way of collecting information because a wide range of data can be collected. It is also easy to manage. We are using web based survey to conduct this research. Because web based surveys are easy fast and cost effective and by choosing this one can reach to maximum people, and we can get thousands of responses in short amount of time. There is no geographical limitation in web based survey.

2.3 Methodology for Research

Research quality depends upon the technique used to get data for scrutiny. A survey questionnaire is used to seize the information for research work. The purpose of this questionnaire was to get data related to e-banking from Pakistani banks. "A questionnaire is a pre-formulated written set of questions to which respondents record their answer, usually within rather closely defined alternatives"[4]. It is a very useful method of data collection when researchers know what is required and how to proceed to get anticipated results. These questionnaires are usually administrated personally, mailed to respondents or distributed electronically. In this research a web based survey is used to collect data from banks relating e readiness

Chapter 3

3 Literature review

The job of ICT (Information, communication and technology) in the growth of developed and developing countries is like a medium whose outcome can augment economic growth by leaps and bounds. For a country to be e-Ready means it is effectively using ICT for large inhabitants with legal agenda of ICT [14]. Every country is transforming its existing organizational infrastructures into new and effective frameworks with the use new technologies to join the race of developed countries. This chapter focuses on the literature of e-Readiness and e-Banking.

3.1 ICT development and Indicators in Pakistan

Pakistan has always been given value due to its geographical location, manpower and availability of resources. Pakistan is developing instead of being politically unstable. Pakistan is a bridge between Gulf and other countries. [15]. GDP in Pakistan is getting stable because it is 7.5% for last three years. This places Pakistan in 47th place when ranking world's largest economies.

3.2 E-readiness

The age, in which we are, is the information age; which is gift of innovations in technological developments. This age has sustainable contribution in organizational, cultural, political and technological areas. In this information based age, the power of countries is represented by the intellectual power of the its men, and those factors which inspire these men to work more in an innovative way rather than by natural resources and capital.

McConnell states in his global report on e-Readiness that

"Electronic preparedness measures a nation's capacity to participate in the digital economy. Electronic preparedness is the source of economic growth in the century of interconnectedness and the requisite to carry out successful electronic business. Neither countries nor businesses can prosper if the main electronic pillars are not in place. For those countries who have only taken their first steps, the rhythm at which the changes are taking place implies complacency on their part which is a danger to their future development."[6]

Though E-readiness is defined as "E-readiness means different things to different people in different contexts" [2], yet we have to modify this definition according to use under technological consideration. Soundness of a country in E-Readiness resides in availability of resources and strong infrastructure. Every country estimates the performance of its programs and projects, in order to decide and make decisions about new policies. Thus, infrastructure, capacity and opportunities in country, are the stick yard to evaluate its E-readiness.

3.2.1 Perspectives of e-Readiness

As explained above E-readiness means different things to different people. E-readiness should be intended to create a value which means that what is the goal of e-Readiness? What type of opportunities will be created with a particular e-readiness activity? Appendix 3-1

The opportunities may be like e-Banking, e-Government-Health, e-Farming, e-Tail and e-Procurement. All these opportunities require highly consistent network and suitable applications in an e-ready country. This network should consider security and privacy of users. Another prospective of e-readiness is availability of high bandwidth and reliability. A proper government body known as e-government should take protective measures for consistent and reasonable infrastructure. Public awareness about technologies is of supreme importance for high and proper usage of e-readiness in developing countries. For a society to be e-ready, everyone in society should have know how of computers in school, home, offices and market. Measuring an e-readiness of a country is not an easy task. There are many tools available for it. All these tools use parameters like infrastructure, applications, access, internet usage, economy [18].

All these dissimilar prospective of e-readiness establish the approach to use of e-readiness in a complete mode.

3.2.2 E-readiness Ranking and Pakistan

Technology hurdles are always there in the progress of less developed countries. For example if we look into Asia-pacific region, we come to know that Thailand (47th), India (54rd), Philippines (55th), Sri Lanka (60th),Vietnam (65th) and Pakistan (64th) are all facing infrastructural and technological hurdles but are gaining momentum [8]. The market like Japan (18st) and South Korea (15th) are growing faster. Australia (8th) and New Zealand have improved in an excellent way from 2007 to 2008 in e-readiness rankings [8]. All other countries were on downfall in 2006 e-readiness rankings. Pakistan is setting roadmap for e-readiness improvement but it will take time to get required level of improvements. There is no sound legal and policy environment in Pakistan that supports effective competition. Telecom sector in Pakistan is fastening its roots day by day. It shows that in this market has a potential for mobile and telecom companies. Appendix 3-2

3.3 Electronic Banking

Desire for easiness of customers has molded traditional banking into electronic banking. Electronic business depends upon the success of e-banking in a country and success of e-Banking depends upon the effective use of ICT in country. E-Banking can provide services to large population with ease. Banks are increasing their branches to capture market and enhance customer s' access. Monitoring of banking performance is no more problem for bankers. They can easily get view of bank performance in a certain time period and can do future arrangements therefore.

3.3.1 PC Banking

The increasing consciousness of the significance of computer literacy has resulted in growing use of personal computers in households. This would definitely support the growth of PC-banking which would virtually set up a bank branch in the customer s' home and offer 24 hour service seven days a week. [9]. The lower cost of personal computers has accelerated the use of computers which means customers are able of doing banking activities at home without need of going bank. As we know that PC banking can be further divided into online banking and internet banking. Online banking refers to banking with in a closed network of bank with the use of specialized software given by bank while internet banking can be performed from anywhere with internet access [9].

3.3.2 Internet Banking

Internet banking has freed customers from use of proprietary software of banks for online banking. Independence from time, place and flexibility are services provided by internet banking for customer easiness [10]. Internet banking needs more secure channels for transactions. Security structure is a major issue in internet banking. There is need of refined encryption algorithms for browsers and public networks for reliable internet banking. Customers in developing countries are confident in using internet banking due to insecurity.

3.3.3 Tele-Banking

"Tele-banking can be considered as a form of remote or virtual banking which is basically the delivery of branch financial services via telecommunication devices where the bank customers can perform retail banking transactions by dialing a touch-tone telephone or mobile communication unit, which is connected to an automated system of the bank by utilizing Automated Voice Response (AVR) technology According to Leow (1999), Telebanking has numerous benefits for both customers and banks. As far as the customers are concerned, it provides increased convenience, expanded access and significant time saving. On the other hand, from the banks' perspective, the costs of delivering telephone-based services are substantially lower than those of branch based services. " [9]

Telephone banking lack assurance of customers because there is no choice for withdraws of cash by phone and no verification by statements and receipts after transactions. You can only perform, checking account balance, funds transfer between current, savings and credit card accounts, bill payments, stock exchange transaction, receive statement via fax, loan payment information [Bangladesh]

3.3.4 Mobile Banking

Introduction of WAP technology has also contributed in banking sector by giving banking in hand to customers. Customers can use banking facilities with the help of GPRS on mobiles and PDAs. It is also a form of internet banking which is in initial stage of development. The problem in use of this technique is due to lack of speed and information available.

3.3.5 Automated Teller Machines

"This technology was however implemented by Posbank in Singapore as early as 1997 where the ATM in fact sorts and counts the money and asks the customer to verify the amount. If the amount tallies the customer's account is instantly credited but however, if the amount does not tally, then the amount is robotically returned to the customer. It is this ability of the machine to perform like human teller, which has succeeded in weaning customers away from the counters and to the automated teller machines. In the initial stages of development of ATM's, financial institutions installed ATM's in practically every strategic location with the primary objective of securing spirited benefit" [9]

E-banking has introduced the ATMs to let loose the banks from constraints of geographical location and time [9]. It has increased the working time further than office hours of banks. In the beginning the installation and commissioning of ATMs' was costly for bank at different locations so banks have now established ONE-LINK and M.Net switches to reduce this cost which has also contributed to customer s' satisfaction and reliability.

3.4 Issues in e-Banking Paradigm

E-banking evolution would lead us to two classes of banks very large banks and small ones. Small banks may offer portals to compete services offered by large banks. As the banks are polarizing into two segments, it is important to know what type of technology they are using. Internet technology is almost used by each and every bank to compete in market and to provide services to customers. The contents of bank websites also determine what type target market is being focused by bank. It also differentiates a bank from other banks by reflecting its features on websites like informational, transactional, portals [11]. Banks are now interested in keeping those employees which are aware of technology use. Banks are also focusing on training of employees to take on new technologies and develop employee skills [12].

3.5 E-Banking in Pakistan

State bank is a regulatory authority for banks in Pakistan. State Bank of Pakistan evaluates annual progress of banks in Pakistan and it also reviews the e-banking status in Pakistan every year so it publishes quarterly progress reports of e-banking. "E-Banking has grown as high as 32 percent growth last year (2008). The report pointed out that the total number of ATMs during FY08 stood at 3,121, registering a growth of 21.0 percent as compared to 17.0 per cent increase in the previous fiscal year. The volume of Real Time Online Branches (RTOB) during FY08 stood at 5,282 and recorded a growth of 26.4 per cent as compared to 5.0 percent decline in the previous fiscal year. Moreover, the volume and value of RTOB transactions in FY08 reached 36.9 million and Rs13.3 trillion, showing an increase of 19.9 per cent in numbers and 32 per cent in value as compared to 46.2 per cent increase in numbers and 49.0 per cent in value in the previous fiscal year. According to the report, the quantity of active (in-use) debit / credit cards during FY08 reached 6.7 million, which shows an aggregate growth of 15.8 per cent, compared with a 53.7 per cent increase in the previous fiscal year"[22].

3.6 Security Issues in E-banking

Banks are using security measures like IDS, firewalls and encryption decryption mechanisms but there is no security that if customer account is accessed by illegal ways, he will be compensated for financial loss [19]. Only 30% of people using the internet are more careful and fearful than the other 70% are not careful or much careful and sensitive about security threats [19]. Digital certificates and signatures are also used to ensure that authorized customers are accessing the systems. Increasing demands on consumer sides is also a great challenge to internet banking as opposed to introduction of new technologies on supply side of banks [20]. So security is a big obstacle in the implementation of e-banking services. To get more development, security problems must be minimized, so security management strategy can provide guide lines to solve these problems. This security management strategy will integrate technologies and management together to handle security issue [21].

Chapter 4


4.1 Introduction

Next step after data collection is data analysis and this analysis is to mine the data for predictable results. Research legitimacy depends upon the data collected from research domain and the strength of collected data depends upon the source of data. In this research, the data is collected through concerned IT persons of banks, those who are involved in e-banking related activities of banks. In this chapter, the overall e-readiness of all banks is explained. This e-readiness view is perceived through the data collected from banks. E-readiness is judged in form of telephone banking, website, transactional website and aggressiveness of banks in adoption of technologies and e-banking services. There were 45 questions in which some were with subparts as well. These questions were categorized into telephone banking, website, transactional website and general awareness of e-readiness in banks. This chapter will explain each category in light of data collected from banks through web based survey. According to state bank of Pakistan there are than 50 banks working in Pakistan, Each with different financial positions and volume of customers, so services offered, vary from banks to banks depending upon the requirements of customers and strategy of banks to capture market. In this chapter, on the whole e-readiness of all banks is explained to know, how we are moving towards e-ready state and how e-banking is helping to make banks e-ready.

4.2 Research Dimensions for E-readiness of E-Banking

For a valuable research analysis it is very vital to establish dimensions of research. In this research, a number of dimensions for e-readiness are explored which can present clear understanding of e-readiness of banks for e-banking. The questionnaire was planned to get data from banks for these research dimensions of e-readiness for e-banking. Only dimensions shown in figure 4.1 are explored.

4.3 E-Banking Policies

Strength and limitations of a bank depend upon the policies used and their implementation.

4.3.1 Contingency and Business Resumption

Customers are more interested to get direct information and access to accounts. PC banking, cash management and internet promotions are aimed to business, tactical and reputation issues of banks so all these critical functions expand the span of contingency and business resumption. There are only 14 banks out of 21 (Figure 4.2: Appendix B) responses for e-banking policies which have this policy in their business planning which are about 67% (Table 4.2: Appendix A).

4.3.2 Privacy policy

Point behind the privacy policy is to advise or notify e-banking users about what they are supposed to do, what not to do and what are obligations of organization to ensure customer privacy i.e. customer's. There are 74% (Table 4.2: Appendix A) banks using privacy policy on website, ATMs and telephone banking services etc. In e-banking privacy policy ensures integrity of e-banking services by providing users with passwords and authorization for usage or services.

4.3.3 Email/Internet usage

The use of internet in organizations is very common however there may be some restrictions or limitations or purpose of usage of internet and email. It depends upon nature of business and working of employees in company. Email and internet usage policy ensures that internet and emails are used only for banking services and customer s' help. Frequency of banks using email internet policy is 16 out of 21 (Figure 4.2: Appendix B) responses for e-banking policies that are 76% of all responses (Table 4.2: Appendix A)

4.3.4 Password

The password policy of banks ensures privacy and security of customers while using e-banking services. So there must be some policy behind making a password or issuing password to customers. It handles what and how should be made a password unique and secure. It defines authentication and retrieval rules of password. It also defines length and composition of passwords and there is need of a password administration to observe these rules and issue in password policy. Only 16 banks (Figure 4.2: Appendix B) use this policy which is 76% of 21 responses for all policies (Table 4.2: Appendix A). This policy also ensures security of passwords by implementing encryption techniques.

4.3.5 Strategic or business plan

Every business has a strategy or plan behind it to achieve essential targets or goals. These targets or goals may be to earn profit, decrease cost or increase customer s' satisfactions, so all most every bank has strategy or business plan. Every bank using e-banking, develop a business plan or strategy to get anticipated results of e-banking services. The data collected shows that there 18 banks out of 21 (Figure 4.2: Appendix B) response have this policy which means 86% banks have reported about this policy in survey. (Table 4.2: Appendix A). Others may also be using but they have not mentioned about this policy. Strategic policies are usually for long term goals.

4.3.6 Security

Security is a pinning issue for banks providing e-banking services. Security policy handles a number of threats including customer and information confidentiality. Customer s' fear in using e-banking can be decreased by providing a secure and effective security policy while using e-banking services. This policy involves what type of security algorithms should be used and what level of security should at which type of e-banking service. Every bank in Pakistan is using this policy. 20 banks (Figure 4.2: Appendix B) are using this policy out of 21 responses of e-banking policies so it 95% of all responses (Table 4.2: Appendix A). This policy addresses firewalls, antivirus, IDS and encryption techniques for e-banking.

4.4 Telephone Banking

Telephone banking is a time saving e-banking service but still 48% (Figure 4.3) of banks surveyed are not offering this service. As the competition increasing among banks and every bank has a plan to catch the attention of more and more customers so telephone banking will be ultimately offered by every bank in Pakistan. Some of very large banks in Pakistan are not offering this service like Allied Bank and bank of Pakistan. There are 52% (Figure 4.3: Appendix B) banks offering this facility and this percentage will increase as banks looking for more customers convenience.

There are two ways of offering this service to customers. One is to get services by outsourced call center and other is to have own call center. Both approaches are being used in Pakistan. There are four banks at the moment which are using outsourced call centers to offer telephonic banking. This is just a 19 % of all banks surveyed and 36% of banks using telephonic banking. (Figure 4.4: Appendix B) Usually banks prefer to setup own call centers for business policies and privacy. (Table 4.3: Appendix A)

There are eight banks using own call center out of 21 responses for telephone banking. It means only 72% of banks have their own setup for telephonic banking out of all banks offering this service while if we look as a whole we come to know it is just 38% of all 21 responses. (Figure 4.4) The telephone banking can be accessed using line land number or mobile. The analysis of data shows that 19% banks give access by line land numbers only, 0% by mobile and 33% by both mobile and line land numbers

Following are basic services which customers can use in a well organized telephonic system, ask balance, transfer to own account, transfer to other account of same bank transfer to other account of any other member bank of MNet or OneLink, transfer to the account of bank in other country.

No one bank is offering all above services to customers. (Table 4.4: Appendix A) shows that each bank offers some of services by telephonic banking. It may be due to the customer´s reliability or fear of doing telephonic banking or there may not be proper infrastructure available for secure transactions from banks to banks and from country to country.

Service wise analysis of data shows that first service that is "Ask Balance" is being offered by 92 % banks of 13 banks offering telephonic banking while second services is being offered by 53 % banks of 13 banks third by 46% and Fourth just one bank that is 7 % of 13 banks offering telephonic banking. So over all analysis shows that balance asking and transfer to own account are the services mostly provided by telephone banking.

4.5 E-banking Security

95% banks in Pakistan have this security measure on web sites. Antivirus software is installed to stop virus attack which may harm data of bank. There is need of proper updating time of antivirus software which may be daily, weekly, monthly and yearly or never updated. (Figure 4.5: Appendix B) shows antivirus update interval. Banks are implementing firewalls and intrusion detection systems to stop and detect wicked attacks. Firewall is that software which prevents any nasty attack or unlawful access to happen with system while IDS is software which detects nasty attacks which have happened with system. A system with IDS and firewall is considered to be secure and safe system. An IDS is used by 15 banks out of 20 surveyed banks. It means 75% banks are keeping their systems and data safe from unknown attacks. Following procedures or controls are also in place

  • 95% of banks are using control procedures to stop hackers from accessing the system.
  • 85% of banks are using control procedures to stop line tapping.
  • 80% of banks are using procedures to handle discovered intrusion attacks

Security of transactions also depends upon the customer privacy. Password is one facet of customer security for accessing services of e-banking. There was question in our survey which was aimed to know how many banks are giving employees to access customer password. Out of 7 seven responses for this questions, six banks don't allow employees to access customer password and only one bank has given privileges to access customer password.

There was a question to know, how many banks are using safe guard to avoid or detect replica transactions. The result shows there are five banks out of six responses which are not using any gaud or detection mechanism to know about duplicate transactions. Only one bank has safe guard for duplicate transactions.

To secure transactions and messages while moving from network to network, banks use digital signatures and certificates. Digital signatures are used to simulate signature security rather than written signatures. It involves two algorithms, one for signing with private key and other to verify with public key of signer. These are used to provide authentication like written messages. This is also known as asymmetric cryptography. Digital certificates are used to exchange information along by binding signature and public key. It may include validity period of message, name, address, and public key, public key of signing authority. There are six banks using transactional websites so 50% of these using digital signatures and 50% digital certificates (figure 4.6: Appendix B)

Security of data is determined by bits used to encrypt data. Out of 20 surveyed banks, only six offering transactional services and out these six, there are 50% using 128 bit and 50%other schemes of transaction (figure 4.7: Appendix B), (Table 4.5: Appendix A)

4.6 Websites

Most commonly used e-banking service by banks is website. Website is an easy way to interact with customers. Mohsin has described 7 types for internet and transactional websites in his research for banking websites in Pakistan. These types are informational, legal statement, order, ease of use, artistic effects, performance and others. These categories can be used as template to develop bank website. [16].These can give clear idea of what to include in website and what contents will better reflect bank s' services. On the other hand these seven categories can also be used as benchmark to evaluate websites of banks for informational and transactional purposes. It is important to know that the bank has checked or not into similar domain names and web addresses that are similar or could be mistaken for the banks. Analysis of data shows that 55% don't take a look at domain names of similar web address and only 40% banks review it before selecting a domain name and web name.

Most of banks prefer to give financial reports on websites to keep customers aware of bank stability and progress in spirited environment. About 76% banks are presenting their financial reports on websites while only 24% banks of surveyed are not intenerated in putting financial reports on websites. Availability of reports depends upon the policies of banks and nature of website contents.

Websites need proper checking and administration for functionality and to keep all contents up to date but it is also important to know where the website of a bank is hosted. This research shows that 57% banks have in house hosting and 43% offsite (figure 4.8: Appendix B).

Those banks which have offsite web hosting they do or don't have contract with host of website. This contract may be for

  1. Accountability for data and secret treatment of information
  2. Security and safety measures on part of the service provider
  3. Procedures to notify the bank, of any unlawful change and malicious attacks

If observe (figure 4.9: Appendix B) we can easily say that banks are more anxious about security precautions with website host. Liability for data confidentiality and notification procedures of nasty attacks is also somehow security precautions. (Table 4.6: Appendix A)

4.7 Wired and Wireless Connectivity of banks

We can say that internet is a vertebral column of information communication technology which is a source of communication and interaction among geographically detached resources. Connectivity of internet to bank is defined depending upon the required bandwidth, reliability and nature of services provided to customers through internet. DSL is mostly used way of internet connectivity to banks as shown in (figure 4.11: Appendix B). Dial up, frame relay and cable are not in use anymore. There are 7 banks out of 21 responses for connectivity which are using ISDN for internet. Some of banks are at once using one or more of these technologies for internet connectivity. Many ISPs are working in Pakistan to provide internet access at low cost and high speed. Internet users are doubling each year in Pakistan. (Figure 4.10: Appendix B) shows how many banks are connected by each of ISDN, DSL and other ways.

Research analysis shows that 43% banks are using wireless technology for internet and within network access. Speed of wireless technology is not so much high, it is used for limited purposes in banks. Usage of wireless technology requires a well established secure network for transactional purposes. Banks don't prefer this technology because of reliability and security concerns. Research shows that banks using wireless technology encrypt and authenticate all sensitive, and important data. (Table 4.7: Appendix A)

4.8 Risks and cost analysis of e-banking

Risk evaluation and management are two significant issues in embracing of technologies. There are bodies or board in banks which are in charge for risk analysis of banking projects. E-banking is also evaluated for risks in banks. These risks can be

  • Strategic risks involve long term effect of e-banking on bank operations.
  • Transactional risks involve effect of using e-banking for transactions and its effect on traditional banking in terms of efficiency. It also involves security measurement of transactional systems.
  • Reputation risks determine effect e-banking on customers of banks. How they perceive this new technology and what is the level satisfaction after e-banking usage.
  • Compliance risk determines conformity and acquaintance of e-banking in already existing systems and environment of bank.

The analysis shows there are 95% bank out of 20 responses in which boards of banks are fully aware of risks involved in e-banking. F There are only 5% banks whose boards are not fully informed of risks involved in e-banking. The boards of all other banks evaluate e-banking in light of above mentioned risks. Banks do cost benefit analysis of any new services before it is presented to customer for use. Persons conducting cost analysis of e-banking must have gone through risks associated with e-banking services so that analysis must have considered all mitigation controls. Cost analysis includes hardware, software, vendor services and other communication costs. The data shows that all banks in Pakistan perform cost analysis of e-banking. Cost analysis can also portray flaws in policies and bank initiatives for e-banking adoption. (Table 4.8: Appendix A)

4.9 E-banking Transactions

Transactional websites offer communication between customers and banks like virtual banks where it seems as customer is actually at the bank and can do a number operations or transactions on website. This feature of transaction is not so common in Pakistan. Only a few numbers of banks are offering transactional websites but with restricted operations. There are 25% banks out of 20 responses for transactional websites (figure 4.12: Appendix B) which are offering transactional websites and 75 % banks of 20 responses are (figure 4.12: Appendix B) lacking this facility. A transactional website can offer following services like transfer of funds between accounts, bill presentment, online application for checking and savings accounts, screening of loan status and credit card account information, checkbook reconciliation, viewing of digital checks online, issuing stop payment orders online, viewing of account balances, bill payment, online mortgage and CD applications, 24/7 customer service by phone or email, viewing of account history and ordering checks online.

As customers in Pakistan do not have so much knowledge of computer science so it becomes difficult for banks to offer such services. There is also problem of reliability and security of customer transactions. Customers also feel fear of doing transaction on internet it may be due to the reason that they are not well familiar to such type of banking before. It will take time for customers to be familiar with new technologies and it also depends upon education level of Pakistan. (Table 4.9: Appendix A) shows banks and their e-service in transactional websites. E-services by transactional websites show real sense of e-banking but in Pakistan this sense is not much developed at this point.

Real time processing means systems response with in a predetermined time with truthfulness and efficiency. These are fasts systems because their response is in microseconds. As ATM machines work in real time mode because ATMs do transactions at the time of customer interaction with machine. These are usually reactive or embedded systems. In batch processing, all transactions are batched and done latter on at some specified time. Real time processing can be centralized or distributed. In our research we have found that banks use all these types of processing. There are only five banks which are using real time centralized processing for transactions and three banks real time distributed. (Figure 4.13: Appendix B) Batch processing is good choice for legacy systems where performance can matter so there is bank found in research which is using batch processing for transactions.

Testing of transactional website with employees before offering to customers can depict behavior of website in real time environment. It also points out problems which may take place with employees while using this site. Analysis of data shows that all banks which are using transactional website do testing with employees before offering to customers for use except one bank which has no such testing. (Table 4.9: Appendix A)

4.10 E-awareness and e-banking Training

Information technology is a rising field in Pakistan which is accommodation for all other fields. Most of employees in banks have not been uncovered to such technology before so they feel problems in using it even IT persons in banks feel problems in implementing new technologies. Banks arrange training programs for IT personnel to make up and furnish them with new technologies and e-services of banks. They also arrange IT courses for other officers and staff of banks to make the most of e-banking services efficiently. All 20 responses from banks show that banks have special training programs for IT persons and other banking officers and staff as well. Analysis of data shows that banks are on the way to e-ready state so, it also demands for e-ready staff of banks.

Managements in banks are highly profiled people and they keep on watching customer needs for services and they also evaluate level of customers using service of banks. They develop programs for customer support and education. These programs educate customers about banking service and their usage. There are also well established programs for customer demands, complaints and problems. Analysis of data has shown that each bank has well organized programs for customer retention and support. (Table 4.10: Appendix A)

4.11 Summary

Understanding of e-readiness in context of e-banking can be better explained taking into account the above research dimensions for e-readiness of e-banking. These Dimensions are e-policies, telephone banking, connectivity, security, e-awareness and training, transactions and e-services, websites and risks and cost analysis. These dimensions have different research concerns. These research concerns help in understanding current picture of banks for e-banking. E-policies include contingency and business resumption (67%), privacy policy (71%), email internet usage (76%), password (76%), strategic or business plan (86%) and security (95%). These policies depict how the banks are pre-planned for e-banking and their considerations for e-banking initiatives. There are 48% banks in Pakistan which are not offering telephone banking while those 52% which are offering have two ways to offer this facility. One is outsourced which is 19% and other is Own call centers that are only 38% banks. Users can access telephone banking system by mobiles and line land numbers. E-banking security involves update of virus software, firewalls, digital certificates and signatures. Websites of banks in Pakistan hosted offsite as well as in house. Offsite hosted sites are 43% while in house are 57%. Banks are connected to internet by different means. The mostly used is DSL for connectivity and second most is ISDN that is 33%. There are only 43% banks using wireless connectivity. E-banking services are reviewed by legal counsels. There are only 10% banks which have faced e-crimes. Almost all banks evaluate risks involved in e-banking and cost analysis of e-services. There are only 25% banks with transactional websites. 71% banks use real time centralized processing for transactions. 83% banks provide e- banking trainings to employees. This analysis shows that Pakistani banks are not sound in providing e-banking facilities.

Chapter 5


This study work was of exploratory in nature. Previous chapter has explored and analyzed research dimensions for e-readiness of e-banking. In this chapter the final conclusion of analysis and future work for e-readiness of e-banking are highlighted. The conclusion is derived in the light of research questions, data analyzed and research objectives. ICT is in early stages of maturity in Pakistan. According to e-ranking report in 2008, Pakistan is at 64th number from over all 68 countries assessed for e-readiness. Emergence of e-government seems to be hopeful for secure future of e-readiness in Pakistan. Well established infrastructure and well defined policies of e-readiness are hopeful factors for e-banking in a country. Pakistani banks can use these research dimensions to evaluate their e-banking soundness.

5.1 Conclusions

  • E-policies like privacy, email internet usage, password, security and strategic or business plan are defined in advance for e-banking in Pakistan. Contingency and business resumption policy is not well measured and designed before e-banking services into work.
  • Telephone banking facility is not provided by a large amount of banks. The services provided by telephone banking are limited. Mainly customers can ask balance through telephone banking and in a few cases transfer to own account. Own call centers are favored rather than outsourced call centers in banks offering telephone banking services. Customers access this facility with line land numbers and mobile.
  • Security is an important aspect for e-banking services. According to analysis all banks offering e-banking services consider this issue and take steps to ensure it. Antivirus software is updated day by day in banks. There are control actions for line tapping, hacker preventions and intrusion detections. Banks offering e-banking use firewalls in banks to stop happening of spiteful activities. There are six banks which are offering transaction facility on internet. These banks offering transactional sites using digital signatures and certificates.
  • All banks have websites. Nearly all of banks provide their financial reports on websites to keep customers attentive of bank´s growth in spirited atmosphere. Mostly banks do not check domain names for websites before uploading for customer use. Web sites are hosted in house and offsite but most of banks use in house servers for website hosting. Offsite website hosting has contracts for data secrecy, safety measures and notifications for unlawful access and change of services by host.
  • First, typically used mechanism for internet connectivity is DSL and secondly is ISDN in banks of Pakistan. Wireless connectivity is limited in use and is used only to access network inside a bank.
  • As ICT is not matured enough in Pakistan so e-banking legislations or rules and regulations are not well defined. There are legal counsels in banks which review e-banking services in banks. There is probability of one bank which encountered e-crime. All six banks offering transactional sites confirm legitimacy of customers before access to system. Websites are monthly reviewed for correctness of contents and links.
  • According to analysis most of banks offer internet banking to gain access to new market and customers and to keep hold of customers. Second most objectives for internet banking are to boost ability to deal with customers to improve bank reputation and to achieve operational efficiency. Banks offering e-banking services have a target market for e-banking and trade area to provide e-banking facilities at large.
  • Strategic, transactional and reputational risks are evaluated for providing e-banking services. In Pakistan all most all banks evaluate e-banking services for risks. All banks offering transactional services on websites do cost analysis of e-banking services.
  • Most of banks are not providing transactional websites. These are only 25% responses which have transactional websites. Mostly of banks are using real time centralized systems for processing of transactions. Mostly transactional sites offer transfer of funds, view of balance, view account history and bill payment etc.
  • Banks see confidence level of vendor systems before hiring services or purchasing e-banking software from vendors.
  • Analysis of data collected shows that all banks offering internet banking train IT personnel, bank officers and other employees to accept new technologies. Banks have special developed programs for customer s' support, demands and complains regarding e-banking and other banking services.

5.2 Future Work

This work has explored in which dimensions for e-readiness of e-banking can be evaluated. Future work may be what factors are involved in e-readiness of banks for adoption of e-banking and how these factors can be improved

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