Breakthrough in the banking of Bangladesh

From Dr. Mashiur Rahman :: ICT expert :: VoIP & Nanotechnology

Breakthrough in the banking of Bangladesh Online payment

Edward Apurba Singha

In this electronic age nearly all of our activities partially or entirely depend on the power of state-of-the-art technology. Banking sector is not beyond this trend. Many countries including our next door neighbouring nation India already utilised information technology (IT) to leverage their financial activities. This means people in that country now able to do online transactions and their legacy banking system now on the verge to go fully automated. Bangladesh Bank on November 2 partially opened up online payment with the vision to assess its impact and effectiveness based on these calibrated future strategies to launch full-fledged online payment system. Dr. Atiur Rahman, Governor, Bangladesh Bank said, "It is a landmark initiative to materialise our long cherished dream for digital transaction. It is just beginning and time to time we will address all the relevant issues for the successful chalk out of online payment system. Our vision is to minimise the human intervention in usual monetary process by ensuring proper security. We are also planning to utilise this online payment system for the marginal people in order to bring them in mainstream financial activities". Following processes of Bangladesh Bank will come in the reality: 1. Online fund transfer between two accounts under the same name in the same bank will be possible. 2. Subscribers of internet banking will now able to pay utility bills by internet from customers' accounts to billing accounts. 3. Online transaction by credit card in local currency will also be possible.

Now the burning issue is the readiness of the banks to comply with this new technological phenomenon. Several banks operating in the country have good IT installations for quick integration and customisation to offer online banking environment for the clients whereas other banks need technological overhaul to introduce online service.

Banks having inbuilt system for online service mainly cover people in urban or semi urban regions. But for the rural regions the footprint of these privately run banks hardly cover the community people. In this regard, strengthening the capacity of state run banks should give precedence. Present governor of Bangladesh Bank is committed to spread the banking facility to the doorsteps of rural people. Because these people have a great contribution to the national economy. Access to banking will empower their financial activities which may lead to a sustainable socio-economic development. Online payment could revolutionise the rural economy and pave the way of self-employment as well. Different places in Bangladesh are prominent for handicraft manufacturing. These handmade stuffs are coming in the city to sell from different shopping outlets. These scattered handicraft manufacturers could be patronised by providing them loan with a flexible refunding rules. This will inspire educated youths to come forward to start handicraft business. Then the real challenge comes to conduct effective marketing for the produced goods. Here the online payment will come in action. It is evident that online payment also opens the door for e-commerce.

Young entrepreneurs involved in handicraft business could sell their products through e-commerce website. People from different parts of the country will order these products and the entrepreneur will receive payment from the local bank operating in his/her area. So, access to internet and presence of banks is indispensable to develop this business chain in the rural zones. State run banks have good presence in different parts of the country and Bangladesh Bank could help them to launch hi-tech banking and also motivate other private banks to increase their rural presence. Balance transfer between two different accounts of different banks is the prerequisite to kick off e-commerce in Bangladesh. But it needs a better e-Payment Gateway. Bangladesh Bank since 2008 is trying to implement e-Payment Gateway. But still it will take six to eight months to make e-Payment Gateway fully operational.

Bangladesh Bank can think about Paypal as soon as the e-Payment Gateway becomes operational. Many of our IT graduates and tech freelancers currently involved in outsourcing businesses. They take orders from different websites and after accomplishing these the payment channelisation process creates hassle in their activities. Many of them received payment in a costly way and waiting for the indefinite period of time. If Paypal operation becomes commonplace in this country then it will directly channelise the payment from the overseas companies to local account of the clients. For security concerns, utilisation of digital signature is inevitable to secure the e-transactions. Digital signature will help to trace each transaction and thus will eliminate the intervention of interlopers. Bangladesh Bank can also think about to establish virtual private network (VPN) among different banks to secure virtual monetary transactions. Besides this, Bangladesh Bank must ensure that all banks will support the payment gateway. Because without this it is impossible to ensure online payment facilities for all citizens.

Bangladesh Bank on November 8 started automated clearinghouse on a trial basis to ease the cheque clearing process. International donor organisation DFID funded $8.5 million to implement the Bangladesh Automated Clearinghouse (BACH). Initially, three commercial banks namely Janata, Dutch Bangla and Eastern Bank aligned themselves to take part in this trial operation. According to Bangladesh Bank governor it will take several months to kick off full-fledged operation of BACH. Before Bangladesh Bank has allowed Banglalink and three banks such as Eastern Bank, Trust Bank and Dhaka Bank to start mobile phone based money transfer services. It has no doubt that all these steps taken by the central bank will bring a breakthrough in the banking. But it is also important to develop a robust monitoring system and evolution mechanism by the regulator to ensure quality and perfect delivery of services. Writer is the president of NeoSTAR Alliance (NSA).

Source: http://www.theindependent-bd.com/archive.details.php?nd=2009-11-13&nid=149717