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Electronic Banking in Pakistan | Dissertation

  1. Electronic Bank in Pakistan
  4. Background - Electronic Banking
  1. Forms of on-line Banking
  3. 1. 3. Aims OF THIS STUDY
  7. 2. 1. Overseas SCENARIO
  11. 3. 2. TYPE OF THE STUDY
  13. 3. 4. DATA SOURCES
  14. 4. Research AND INTERPRETATION
  15. 4. 1. ANALYSIS
  17. A) Smart Card Uses
  18. a) Electronic Purse:
  19. b) Secure Internet Payments:
  20. c) Automatic Open public Carry Fare Collection:
  21. B) Great things about Smart Cards
  22. a) For cardholders:
  23. b) For stores:
  24. c) For credit card providers:
  25. Automated Teller Machine (ATM)
  27. Working of ATM after closing
  28. 4. 3. The details of banking companies: specific interpretation and research is given in the next paragraph:
  29. 4. 3. 2. Askari Commercial Lender, Ltd
  30. A) Computerized Teller Machine
  31. B) Communications
  32. Internet Bank at ACBL
  33. A) Advantages to Bank
  34. B) Advantages to Customers
  35. 4. 3. 3. Muslim Commercial standard bank, Ltd
  36. Automated Teller Machine
  37. MCB Call Center (Telephony Banking)
  38. A) Services Available through MCB Call Center
  39. ATM Services
  40. Other Services
  41. Intranet for Commercial Customers
  42. 4. 3. 4. Habib Bank or investment company, Ltd
  43. Electronic Banking Situation at Habib Lender, Ltd
  44. Habib Bank or investment company ON-LINE Easy Access
  45. 5. 1. CONCLUSION
  47. 1. Role of Government

Electronic Bank in Pakistan



As the globe has got into the twenty first hundred years, one thing has become all too noticeable, any corporation that wishes to succeed in today's cutthroat competition must embrace Information Technology (IT) with fervor.

In this years of IT new inventions and innovations are influencing all the fields of life. Almost all types of organizations are stepping in to the field of IT, in an effort to increase their productivity and extend their customer loan provider. The same applies to the Bank Sector. Today all the banking institutions of the world are adopting the tool of Electronic Bank.

The need of Electronic Banking was experienced in South Asia over the last 5 to 7 years. This idea emerged as an essential tool for successful bank management. Financial sector has been quick to identify this reality, and in Pakistan, the majority of the banking industry has changed from the old ledger established system to computer systems and automation in order to modernize their procedures. Although foreign bankers were pioneers of taking this concept to South-Asia nevertheless they have yet to start latest Electronic Bank practices in Pakistan

Background - Electronic Banking

Electronic banking is an umbrella term for the process by which a person may perform bank trades electronically without going to a brick-and-mortar institution.

It is a kind of banking where funds are transferred via an exchange of digital signals between financial institutions, rather than an exchange of cash, checks or other negotiable equipment.

The growth in use of the web world-wide and the introduction of procedures allowing secure transactions on-line have created the new field of on-line bank, where customers package with their banking institutions chiefly or entirely through Internet connections. Opening hours or location of branches, unlike the traditional banks will not limit such services. Both existing banking companies and new groups are already moving into this probably very important area. Since on-line banking services can be utilized with equal decrease almost any place in the developed world, this raises the probability of banking networks operating without respect to national boundaries, with consequent regulatory problems.

Banking on line, commonly called Computer banking, electronic bank or Internet banking, 's been around in a single form or another for a decade or even more.

Forms of on-line Banking

Following could possibly be the ways to bank on-line:

1) Internet Based access

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

2) Standard bank Software:

Bank provides customers with proprietary software to install in their computer systems. The program allows customers to connect to bank's computers on the secure network. The client essentially dials straight into the bank instead of through the Internet.

3) Personal Money Software:

Software such as Quicken or Microsoft Money allows customer to switch financial information with the bank. The software attaches to the finance institutions' computer systems via an Internet based setup and downloading financial information from the client's consideration. Many banks affiliate marketer leading software suppliers such as Intuit or Microsoft to make their systems compatible.

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

Allows a person to pay by cell phone certain charges, or transfer cash between accounts, with instructions to the lender. One must have an agreement beforehand with the establishment to make such transfers.

5) Point-of-Sale Exchanges:

Allows a person to cover retail buys with an EFT (or "debit") greeting card. Occasionally, this card may also be an ATM card. This is very much like using a visa or mastercard, but with one important exception: the amount of money for the purchase is moved immediately - or very shortly - from customer's bank account to the store's profile. An increasing variety of merchants are agreeing to this type of repayment.

On-line Banking: a Revolution

The considered today is the truth of tomorrow but the thoughts of Bank on Your OWN TERMS AT THE OWN DOORSTEPS, which seemed to be actuality of tomorrow, is not a a far more mystique.

What we can do NOW (?)

  • It allows customers to do the majority of their financial trades at home on an individual computer.
  • Pay your charges on-line while you're watching TV.
  • Check your profile amounts from your digital cellphone as you stand in line to plank a airline flight.
  • Consolidate your entire financial accounts on-line in one convenient, secure location.
  • Have usage of friendly, helpful customer service representatives

Why on-line banking?

Unfortunately, banking is a "necessary bad" that may take a huge chunk out of already busy schedules. Browsing a branch or ATM, paying expenses by newspaper check (and mailing them) and balancing a chequebook all can be time consuming. Bank on-line, by its nature, can automate several processes, keeping time and, oftentimes, money. One can access his bill and do bank when (and where) it is convenient for him.

Following can be online bank services offered by various banks

  • Check account balances
  • Make exchanges between online accounts
  • Check the position of loans
  • Track investments
  • Apply for loans online
  • Pay expenses electronically
  • Download username and passwords to an individual funding software program

On-Line Bank Advantages

  • Internet banking institutions are open seven days a week a day a day
  • In general, you will find lower fees and higher rates of interest for deposits due to the reduced cost of functioning on-line rather than needing numerous physical loan provider branches.
  • Create a far more in depth profile of each individual customer of what their needs and anticipations are.
  • Be able to provide services to each customer that are customized to their specific preferences
  • You will have easy access to account information and trades, because any Internet-enabled computer may become your "bank terminal. "
  • You will generally have up-to-the-minute current bank account information due to the automation of most systems.
  • In many situations, on-line banking institutions offer free monthly bill pay, that can be a big keeping in both money and time.
  • You can transfer funds electronically between accounts.

Common E-Banking Services

  • Retail Services
  • Wholesale Services
  • Account management
  • Account management
  • Bill repayment and presentment
  • Cash management
  • New bill opening
  • Small business loan applications, approvals, or advances
  • Consumer wire transfers
  • Investment/Brokerage services
  • Commercial cable transfers
  • Loan program and approval
  • Business-to-business payments
  • Account aggregation
  • Employee benefits/pension administration

Current Circumstance of Electronic Bank in Pakistan

Pakistan is widely considered to be in the Third Wave of growing economies including countries in Asia, Latin America, the Pacific Islands and the center East. These countries started to adopt the web from around 1993. Almost all have a state monopoly over the telecommunications sector with low tele-densities per people and high telecom costs, which restrict Access to the internet to elitist groups in the populace. Less than 2 % of the populace is connected to the web. These countries have weakened politics and democratic corporations where the governments welcome new commercial opportunities.

The First Wave countries include USA, Canada, and some Nordic states where in fact the Internet took keep in the 1980s, and became a recognised feature of cultural, political and monetary life. Typically, over 35 % of the population are linked to the net, with homeowners always connected online to the web 24 hours in your day oftentimes.

Both the First and Second wave of counties have much in common; with both involved in the early development of the web. The gap between your two is speedily diminishing. Both have highly developed telecommunication infrastructures, with extensive networks of fiber optic, dish and ISDN lines that can respond to exponential growth popular for bandwidth. Knowledge of Internet applications is a mainstream activity, and a prerequisite for commercial credibility. They may have highly developed information, dissemination technology and content market sectors, with a strong export emphasis. Both have strong federal government policies that aim to influence the shape into the future information culture, with massive assets in research and development, education, training, IT and Internet developed research.

E-Banking in Pakistan:

Due to progress in sciences and technology, many overseas banks started out offering Electronic Banking services in Pakistan. Electronic Banking offers great opportunities and preserves cost and time for both lenders and customers.

E-Banking in Pakistan is still a relatively new phenomena which is expected to grow now faster with future penetration of pcs and internet services in the country, option of a solid legal construction, removal of concerns about security of electric transactions and improved reliability of communication

Unfortunately Electronic Banking in Pakistan is still in the intro phase and the federal government with the private sector must streamline many insurance policies because of its further development and success. Although international banks took the initiative however now there are private Pakistani banking companies that are making developments in E-Banking. The speed of technology copy from developed to growing countries has been very poor in this regard.

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

  • NIFT was proven in 1997, it is a technology that uses images with high-speed sorters to automate check clearing.
  • ATMs are programmed teller machines offering facilities for instant deposits and cash withdrawals, and are presently offered by around 200 locations in major metropolitan areas only.
  • ETPoS is a method of payment where goods and services are payed for at the point of sale, and comes in major places in a few ultra markets only.
  • Telebanking is cell phone banking center available only in a few banking companies, and again, in major locations only.
  • The central depository system is a well- proven system used in stock exchanges for taking and the transfer of securities.

Secure electronic deals (Set in place): This standard protocol originated jointly by Visa and Master Card and is now baked by American Exhibit. Major players in e-commerce, networking, and processing like Microsoft, Netscape, IBM, etc, are behind technical specs of this standard protocol, and are thus becoming an industry standard for secured obligations on the internet. Place provides confidentiality through encryption; meaning integrity using digital signatures, and authentication of consumer and product owner identity Usage of this, method is ideal because of the degree of security that method offers. However, establishment of this protocol will require Internet product owner accounts.

Smart credit cards:

It is an electronic currency payment, which looks just like bank cards, but is made up of a microprocessor and a safe-keeping unit. The cards hold prepaid account information. Merchants who admit these records are credited for the transaction amount by credit card providers. The usage of this technology is safe but expensive to acquire. Pakistan will require creating a consensus among major stakeholders to purchase making this technology available in Pakistan.

Value-added systems:

Pakistan could build value added systems (VAN) for financial orders to expedite fast and productive movement of remittances to all major cities also to allow exchange of digital documents. These sites will provide distributed connectivity, security assurance of data, and consistency of service. These sites will provide standard bank -to -bank transfer of cash for financial ventures, and will also permit the exchange of electric documents to aid e-trade. These value added sites will also help B2B transactions using EDI systems. The EDI Van's will execute authorized orders between valid trading associates. These networks will reduce specialized complexities and the expense of implementing dedicated associations with a multitude of trading companions. Another gain out of these networks will be the provision of saving viable home elevators the systems, so that authorized partners can immediately access them without contacting the other people. This can help in increasing efficiencies of business ventures in terms of the time and costs.


E-banking has got into the Pakistan overall economy in a major way but, considering the talk about of development of banking industry in the country and the client-base, there are uncertainties about the utility and cost-effectiveness of this mode of banking. The research analysis will examine these points and present recommendations on the subject:

  1. An evaluation, theoretically and virtually, of the progress of banks which adopted digital operations, and the possible role for banking companies in the future.
  2. Discussing problems facing lenders in the opportunity of electronic bank operations.
  3. Specifying the concept of electronic banking companies.

1. 3. Aims OF THIS STUDY

Following aims have been established in do of the study:

  • To familiarise general public with the subject of ELECTRONIC BANKING, enhance their keenness to stay abreast to the techniques, and modern movements of efficient banking.
  • To induce healthy practices in bank business and career and to guide suitable measures because of their achievement.
  • To encourage and provide Electronic Banking information and offer education through research survey details to students and therefore to national finance institutions.
  • To print out and submit the statement for provision to all who are thinking about the issue of Electronic Banking.
  • To study Electronic Banking routines of different bankers in Pakistan.


E-banking is participating in an important role not only in the development of electronic digital services in the first world countries but also in the growing countries too. Because of breakthroughs in sciences and technology, many overseas banks started out offering Electronic Bank services in Pakistan. Electronic Bank offers remarkable opportunities and saves cost and time for both finance institutions and customers.

This review will evaluate the electronic digital performance of lenders. This report emphasizes the fact that on-line convenience, awareness, attitude towards change, internet and computer access costs, trust in one's loan provider, security concerns, simplicity and convenience are the major factors affecting the adoption of Internet lender services in Pakistan.


Scope of the analysis:

The research thesis includes the leading banking companies in Pakistan that have moved into the e-banking era and study its economics. The major restriction of the analysis is that the concerned finance institutions are reluctant to disclose information with regard to costs incurred on E- bank.

Limitations of the analysis:

As the E-banking in Pakistan is at the introduction stage and its efficacy is yet to be tested, adequate literature on the subject is not available.

Moreover, the topic under research requires thorough research, which can be done if more time is allotted for the project.

Banks personnel are reluctant to give information about finance institutions electronic process and problems confronted by lenders.


Literature review is conducted to be able to obtain additional insight in to the study. Literature review consists of earlier studies related to this topic. Which will help and ensure that no important info related to the analysis is omitted. It offers mostly home studies conducted by our own scholars.

2. 1. Overseas SCENARIO

Yoshio, (1999), says that Malaysian bank sector were only available in the 1970's. However, the first visible form of electronic digital advancement in the Malaysian bank industry was the advantages of Automated Teller Machines (ATMs) in 1981. The ATMs to a big extent released bankers from the constraints of your energy and physical location.

Then in the first 1990's, Tele-banking was created in Malaysia, which provided another delivery route for branch financial services via telecommunications devices linked to an automated system of the bank by utilizing Computerized Speech Response (AVR) Technology.

Utsuml, on June 1, (2000), said that the Malaysian Central Bank or investment company gave the renewable light for locally had commercial banks to offer Internet banking services. On June 15, 2000, Maybank, the major domestic bank in conditions of belongings as well as network circulation, http://www. arraydev. com/commerce/jibc/www. maybank2U. com became the first bank or investment company to offer Internet bank services in Malaysia. This service is currently provided to specific customers of the lender and the site offers of the latest 128-tad encryption technology to allay concerns of security among consumers. The assistance provided in this portal include bank enquiry functions, costs payment, credit card payment, funds copy, and accounts brief summary as well as purchase history. Customer care service is provided via e-mails as well as via cell phone lines which is available daily from 6 am to 12 mid-night.

Jose‰, (2000), said that the Hong Leong Loan company commenced its Internet bank operations known as 'e-Banking', which can be reached via their website at http://www. arraydev. com/commerce/jibc/www. hlbb. hongleong. com. my in Dec 2000. In addition to providing services that were previously contained in their Phone banking service, they also offer options of examining account transaction history in their 'e-banking'. They too provide support services via e-mails and telephones from 7 am to 11. 00 pm, 7 days per week.

Al-Jasser, (1999), expresses that both the competitive pushes as well as the expected benefits are triggering concentration and development of E-banking services in the country (Saudi Arabia). However, in the long run it would be the genuine benefits which the banking institutions would realize in terms of higher earnings through reduction in intermediary costs and extended consumer base scheduled to improved services on a cost effective manner that could determine the role of E-banking in the country's bank sector. E bank is likely to play an important role in integrating the financial market segments of Saudi Arabia internationally and bankers would in the end capitalize on these innovations.

Figures, (2000), declares that E-banking Automate critical banking activities and interact electronically with lender with detailed tools that help reduce administrative costs, increase output, and improve cash management-in a security-enhanced environment.


Mashhood, (2000), expresses that the role of information technology in financial services is to aid operational efficiencies, accomplish customer services, mange risk and support in decision-making. Inside the IT plan on financial services, the federal government of Pakistan has asked the state of hawaii Lender of Pakistan to allow opening of internet merchant accounts to allow inter-bank electronic fund copy, to re-engineer techniques of overseas trade sections, to accept e-orders of value less than $500, to open an e-commerce wing in finance institutions, and to assist in clearing and e-reporting in al bankers. The e-commerce action packages for the financial sector have been set up as per guidelines from the government. The program is to hook up branches of 25 local and foreign banking companies in 12 major cities. In period I, branches in a single city will be associated with their head office. In period II, all these banking companies and other financial institutions will be linked together. In stage III, private and general public sector stakeholders will be connected and in the end e-commerce network includes financial, trade and customs networks along with their international links.

Ziauddin, (1998), expresses that In Pakistan, huge investment funds, repeating costs, and absence of economies of size are some of the major bottlenecks to invest in online banking. One other problem is that just a few foreign banking companies are linked with their branches, otherwise all major financial institutions work in isolation.

AL-Bader, (1999), said that in the absence of a centralized data source linked to branches, finance institutions do not only need the communication software to help in communication, but additionally require modems, routers, controllers, etc. irrespective of the quantity of transactions, whether it is small or substantial, huge investments are required to facilitate online bank. Not only the administrative centre assets debut also the recurring costs, such as rent repayments to PTCL, ongoing maintenance costs, etc, are discouraging nationwide banks to get.

Giasuddin, (2003) said that there is a need to establish inter-branch and inter-bank networks so that all finance institutions may be linked together to help electronic repayment systems, that are among basic prerequisites for establishment of the financial infrastructure for e-commerce development. The next step that is still not yet determined in Pakistan is the kind of electronic repayment systems and digital currencies to be used in Pakistan. There are a great number of different ways of payment that exist globally. Pakistan must carefully make a decision the most feasible repayment systems that can certainly match financial requirements, as well as, provide enough self-assurance to the potential buyers and merchants for safety and security of such payments.

Kazmi, (2000), said that there is an immediate need in Pakistan for creating value added systems for financial orders. Without these systems, it will be difficult for business and financial institutions to provide EC solutions with high quality and low costs.

Zaidi, (2003), states that there is a need to establish inter-branch and inter-bank sites so that all financial institutions may be connected together to assist in electronic payment systems, which are among basic prerequisites for establishment of the financial infrastructure for e-commerce development. The next phase that continues to be not yet determined in Pakistan is the kind of electronic payment systems and digital currencies to be used in Pakistan.

Shabbir, (2003), said that both competitive makes as well as the expected benefits are leading to concentration and expansion of E-banking services in the country. However, in the long run it might be the real benefits that your banking companies would realize in conditions of higher profits through decrease in intermediary costs and widened consumer base credited to increased services on a cost effective manner that could determine the role of E-banking in the country's banking sector. E-banking is expected to play and important role in integrating the financial market segments of Pakistan globally and banking institutions would ultimately capitalize on these developments.

Naveed, (2003) expresses that Bank cards are mostly used as convenient payment products and at times a credit facility for short term needs. The State Loan provider of Pakistan is participating in a pro-active role in promoting adoption of technology-based solutions in the banking sector and promoting services predicated on E-Banking. E-Banking has already taken off in this country and the recent release by Habib Loan provider- one of the greatest banks in the country - has provided a significant breakthrough. therefore the question is not when the facilities will be provided but how rapidly these facilities will expand. Attempts in this path are focused upon following areas:

  • Creation of your sturdy legal infrastructure catering to the needs of E-Banking and other payments systems involving digital settlement of funds. Key part of this course was the promulgation of Electronic Ventures Ordinance 2002, which gives legal popularity to digital signatures and records reducing the potential risks from the use of electric medium of business. Express bank is currently engaged in an exercise to help expand augment the legal framework for electronic arrangement of trades in the banking sector.
  • Establishing of Payment Systems Development Committee in which commercial banking institutions are members, to steer the introduction of repayment systems in Pakistan.
  • Creation of the dedicated Payment Systems Team in the state of hawaii Bank interacting with all issues pertaining to payment systems including E-Banking.
  • Creation of a genuine Time Gross Pay out System (RTGS) providing an E-Banking treatment for banks maintaining their accounts with standard operating process (SOP) whereby they'll be able to operate these accounts using their company own premises via an electronic connection with the State Banks own servers.
  • Commercial lenders have been permitted to open and operate Internet Vendor Accounts.
  • Banks are being encouraged to increase the ATMs network through more contribution and a wider network of machines all over the united states. all banking companies have been asked to become listed on a Move and interconnection between the 2 existing SWITCHES has been encouraged for further development of the electronic digital infrastructure.
  • State Bank has recently acquired SWIFT interconnection and has also made it obligatory for banks to acquire SWIFT connection for settlement of most cross boundary financial deals.
  • Expansion of computerized cheques clearing services to all major towns in the united states is actively being pursued. The use of plastic material money such as Credit/Debit cards is making good progress

Ishrat, (2003), claims that introduction of E-banking will improve banking services mainly in conditions of the convenience of the clients including, place, time and price, the banks can provide improved upon services and, as a result, the product quality and skills of banking personnel will also improve. Although many banking services will be available 24 hours, the need for over the counter services will remain and finance institutions would continue steadily to provide normal services during office banking hours in Pakistan also like in the developed countries where E -banking is prevalent, it has been witnessed that customers feel much confident in using e-banking services when they can relate it with offline branches. Strictly online banking without physical branch network hasn't made much headway even in developed countries. In Pakistan, with low rates of literacy the majority of customers will continue steadily to use the 9-5 bank branches.

Rizvi, (1999), claims that their state bank or investment company of Pakistan has constituted various committees such as the Repayment Systems Development Committee and the ECH activity force for the introduction of technology based bank services in the united states. Besides other things, these committees also oversee the improvements in the areas of E-banking. State Loan company of Pakistan coordinates meticulously with other organizations such as the Ministry of Science & Technology (MoST), in initiatives associated with E-banking.

Shirazi, (2001), said that the future of e bank is very smart in Pakistan. Many lenders in Pakistan have started out providing e-banking facilities with their consumers. Over 300 ATMs are in procedure in Pakistan the use of ATMs is swiftly increasing. More and more facilities are being provided by the banks electronically including e-statements, money transfer, bill repayment for utilities and also other acquisitions. By 2002, almost 40% of the lender branches have been programmed and it is expected that this percentage will reach 50% by 2004. The speed of increase is phenomenal i. e. about 318%. Similarly, the amount of online branches has doubled over the last 2 years to 570 and by 2004 this amount will hop to 1356, representing a rise of 376%. This development along with the growing penetration of internet provides E-banking to more and more of these customers both in terms of amounts as well as physical locations.

Mahmood, (2003), claims to be able to meet E-banking challenges that State Loan company of Pakistan established the ECH Task Make under the leadership of Mr. Naveed A Khan

(Country Consultant - ABN AMRO Loan company) to assist in the development and implementation of E-Banking sector to promote E-Commerce. THIS Push was constituted to accomplish in planning & introduction of enabling solutions in the financial sector of the current economic climate having a direct bearing on E-commerce. The ECH Task Push is constituted of varied dedicated experts from the major finance institutions of the country who enrich the Task Force with their experience and expertise with a firm commitment to build up and promote E-Commerce in Pakistan.

Ahmed, (2001), states that Electronic Commerce (E-Commerce) is just another business tool, the one that improves business efficiency and effectiveness and allows cost decrease. It is an automobile to carry out business-to-business (B2B) or business-to-consumer (B2C) orders. For financial institutions and business people, E-Commerce not only makes old operations work better; it also offers a means to break with traditions and create new ways of doing business. E-Commerce has a great deal of potential in Pakistan where ideas are abundant, resources and labor are cheap, craftsmanship is excellent, entrepreneurial skill in abundance, and there is a large occurrence of indigenous and internationally treasured artifacts other tradable goods. However, on a far more realistic side, we've a whole lot of ground to pay before we can experience the benefits of E-Commerce and turn our market around. They are specialized as well as administrative problems which may have to be satisfied and most importantly we need the basic infrastructure, which helps and promotes trading through electronic digital means.


This chapter reveals the basic strategy required in research. It offers the techniques of search, kind of study and the sources of data.


The strategy of review includes the several methods that researcher has used to attain to the conclusion. But anticipated to scarcity of time the researcher has tried out his best to make this survey informative, useful and also beneficial for others. The researcher has also gathered a great deal of information to hide all types of aspects related to automation and electronic data handling.

In this record the researcher has protected to begin with the release of electronic banking, its history, what facilities and benefits it provide and what is its range in Pakistan? Secondly the researcher has visited several banks offering digital services. These were very competent to the researcher quite simply in detailing their opportunity in Pakistan.


The research is descriptive because the intention is to explore the prevailing values given in problem affirmation. Descriptive process was believed to be more suited in this kind of investigation because it seeks immediate response from respondents. This process has been found in many regions of investigations in many domains of academics and scientific discipline.


The goal of the descriptive analysis, here's to give a people or even to describe relevant aspects of the phenomena of interest to the researcher from a person, organizational, industry focused, or other point of view (Sekran, 2000, p. 225). Descriptive analysis is the process of research that displays the data in significant form, thus help to;

  • Think systematically about the aspects in a given situation
  • Offer ideas about future probe and research
  • Help make simple decisions.


The supplementary data has been mainly complied from various books, journals, articles, magazines and newspapers. Some secondary resources of data are statistical bulletins, government magazines and information publicized or unpublished and available from past research, case study and library information, on line data, Webster and internet search. (Sekran, 1996, pp. 57). The books review has been documented from posted and unpublished work. The analysis of secondary information is a useful technique for learning the research process.

The researcher also frequented the IT departments of banking institutions under research for assortment of related data.



Much has been written on the factors impacting adoption or use of new products and services. Some of the major psychological and behavioral factors which have an effect on the adoption of any new advancement such as E- banking includes, consumer understanding, simplicity, security, availability, techno- phobia, or just reluctance to improve, preference for personal services and cost of implementing the technology.

One of a lot more important characteristics for adoption or acceptance of any progressive goods and services is the creation of recognition among the list of consumers of the product or service. Some economists asserted that consumers go through a series of process in knowledge, conviction, decision and confirmation before they are prepared to adopt something or service and the adoption or rejection of the creativity begins when the buyer becomes alert to the merchandise.

Another important factor affecting the approval and adoption of advancement is the level of security or risk associated with it. Even in countries where E-banking is definitely set up, one of the most crucial factors slowing progress of this new creativity is the consumers matter for security of on-line financial trades.

In addition, e - lender customers would also be wondering to discover how the banks would generally package with erroneous transactions occurring in online ventures. Will the responsibility of proof be on the customers or the banks would be eager to settle the challenge up front and investigate the situation later. The element of rely upon this context would determine the security of transacting for consumers generally and determine the acceptability rate of the alternative delivery route over time.

Another factor that would stand in the way of consumer adoption of E-banking is the cost factor. In E-banking, two types of costs are participating. First, the standard costs associated with on-line access fees and interconnection charges and secondly the bank fees and charges. If individuals are to use new solutions, the systems must be affordable relative to alternatives. Often, the acceptance of the new technology may not be viable from the standpoint of the consumer.

Reluctance to change is also another factor that impacts adoption because the prevailing mode of goods and services delivery fulfils the customer's needs properly. In the context of E-banking, telephone bank and mortar branches will be the existing alternative settings of transacting bank business. For customers to change their present means of operating and take up new technology, it must " fulfill a specific need". Unless such a need is satisfied, consumers may well not anticipate to change from the present means of operating. Many ways can be released to overcome the reluctance to change. Provision of individualized customer service personnel to assist consumers in undertaking transactions via the Internet as well as providing specific value added service, which are currently not provided through traditional bank stations can also help reduce the customers reluctance to change.

Some consumers have generally been worried of new technology. These consumers might not exactly have the data or know-how in dealing with computers specifically and so trust humans more than pcs and machines. Their fear for computers and technology generally grows up and eventually grows into a phobia for technology. Thus, technology phobia can also be a factor impacting the customers' reluctance to choose for E- banking.



Different banks also offer services for their clients for copy of money electronically. These options however have one major flaw in them; "the security threat". Many situations of cyber frauds and stolen credit amounts have lead to a fear in the consumers. However the features of E- Commerce are way too many for the client itself that they offset the risk of cyber scam. However, this is an area of concern for both consumer and the businesses so both will work in this regard to get rid of any form of security hazard.

Generally, the E-Payment mechanisms can be split into four extensive categories according to analyze:

  1. Credit/Debit Cards
  2. Digital Money
  3. Smart Cards
  4. Arrangements by different Banks

1: Credit/Debit Cards

The use of bank cards and debit cards was extended beyond the traditional shopping in this age of Information Technology. Today credit cards are also used for shopping online by the end-consumers. Normally, the various websites doing businesses admit the most commonly used Visa and MasterCard for shopping on the internet. It might be worth mentioning here that is a repayment mechanism for B2C type orders. This is the most widely used method of repayment for B2C orders. Owner website requests the visa or mastercard number combined with the expiry day of the credit card and therefore the payment takes place.

According to the shape primarily three gatherings get excited about the credit/debit card payment method. Firstly, the customer goes to the web site and purchases the product. After the utilization of credit/debit greeting card the website transmits the card quantity and confirmation to the merchant bank which after confirmation, transfers the given amount of money to the bank account of the web site in the mean time the web site directs the sold product to the client who provides the bill by the end of the month from the product owner bank.

This function of payment system is not very secured. There's always a risk of a leakage of credit/debit credit card number while the transaction is in progress. This has caused a lot of controversy, as many hackers and credit card operators have been recognized to use stolen credit-based card numbers to shop online. The only real function of security because of this is the firewalls, which an experienced hacker can go with some or maybe no difficulty. Right up until this night out many online frauds have occurred because of this payment mechanism where the person with the stolen credit cards have done shopping on the internet from some distant area of the world and the expense of reaching that person has known to be more than the price of the merchandise itself. In this respect other ways of security may be the monitoring of IP addresses. IP addresses or Internet Protocol addresses are unique addresses for each Internet user all over the globe. What web sites can do is they can trail the Ip of the online shopper during transaction and then if it is regarded as a fraud afterwards they can monitor that person through this Ip. But also for this to occur a very higher level co-operation on the global scale is needed.

A great deal of companies have been attempting to provide security for the web buys through Credit/Debit cards. Cyber Cash is one of them.

2: Cyber Cash

Cyber Cash is a well-established device for repayment of goods and services on the web. Cyber Cash also helps small purchase sizes, allowing sites to look at a micro digital commerce model of repayment for goods and services. Cyber Cash gives consumers added benefits - they can pick one of three payment mechanisms. Cyber Cash facilitates checks, electronic digital cash, or visa or mastercard deals. Cyber Cash has a huge existing customer bottom, and poses a substantial risk to other electronic cash services that use the Internet for ventures.

To begin with, consumers should download free Cyber Cash software from the Cyber-Cash's Internet servers. This software establishes the digital website link between consumers, merchants and their lenders as well as between individuals. Once price has been negotiated and the buyer is ready to purchase, the buyer simply clicks on the Cyber Cash "Pay" button viewed prominently on the merchant's storefront, which invokes the Cyber Cash software. The product owner sends the buyer an internet invoice detailing the purchase information together with a affirmation confirming the full total charges. If the statement appears on the screen, the consumer adds to it his / her credit card number, name as it appears on the cards and an expiration night out. The customer even offers the choice of utilizing a debit service to make the purchase. In this case, the client simply adds the personal identification quantity (PIN) to the merchant's online invoice.

This statement information is then encrypted and handed combined with the invoice to the vendor, which adds recognition and forwards all information to the Cyber Cash server. There the Cyber Cash server initiates a standard mastercard or debit greeting card authorization request to the merchant's loan company or bank-designated handling center. When the authorization submission has been refined, the Cyber Cash server forwards a reply to the vendor. The vendor then completes the purchase. The Cyber Cash server also helps related businesses such as charge, void or come back. Cyber Cash will demand Banks/processors fees for consumer to vendor orders, as well as deals between individuals will compete with the price of a postage stamp.

3: Digital Money

This is actually a little bit of information with intrinsic value that is stored on a person's personal computer's (PC) hard drive or within an electronic wallet and may be used to make on-line buys. It can even be transferred from a PC to a smart credit card for use off-line. The info (digital money) is downloaded over mobile phone lines, Personal computers, or dedicated terminals to be exchanged on-line over computer networks like the Internet. Digital cash does not have any value beyond the accounts to which it was linked, making fraud quite difficult. Some types of e-cash, like that from DigiCash, Inc. , are anonymous; their Digital cash cannot be traced back again to an individual, an attribute of traditional money. In addition to DigiCash, Cyber Cash, Visa, and MasterCard, got developed their own varieties of digital money.

4: Smart Cards

A smart card is a bit of clear plastic, the same size as a credit or debit credit card, with a silicon chip inlayed in it. The chip has a microprocessor, a miniature computer that is capable of doing calculations and store data in its recollection.

The greeting card is "smart" because it is "active", that is it can obtain information, process it and then "decide". For example, when a smart greeting card is placed in a terminal, the terminal delivers its "signature" to the microprocessor. When the "signature" will abide by the existing guidelines in the microprocessor's ram, then the ram files are opened up and the info made visible to the terminal. In the same way, the card directs its "signature" to the terminal and the terminal's microprocessor verifies it. This shared verification is performed "off-line": which means that the terminal is not connected to the system's central computer, known as the "host".

The verification process normally takes a portion of another. Furthermore to digital signatures, Personal Id Volumes (PINs) and hand-written signatures can be used.

A) Smart Card Uses

a) Electronic Purse:

Usually given by banks, these electronic payment cards allow cardholders to avoid the trouble of finding appropriate change by launching value from other bank accounts into an electric purse ("e-purse") which can then be used to cover small-value everyday purchases at shops, vending machines, transport solution machines, parking meters, general population payphones etc.

b) Secure Internet Payments:

Smart cards offer the secure means of payment online, which individuals are requiring as the e-commerce increase goes on. The adoption of common standards by issuers will lead to international interoperability of cards, so that payments can be made across national borders.

c) Automatic Open public Carry Fare Collection:

Contact less smart cards have been implemented by public transfer operators in many large conurbations. The Proton smart card technology can be put into these cards to identify cardholders for discount fares, or even to allow purchase of more digital seat tickets with an e-purse.

B) Great things about Smart Cards

a) For cardholders:

Smart credit cards are convenient and offer a selection of added-value services, that may be tailored to specific needs and you can use on the Internet.

b) For stores:

Smart cards decrease the risk of fraudulence, the costs associated with cash handling and mobile phone costs linked to on-line authorization, as well as offering opportunities to add applications such as loyalty schemes and giving a futuristic image to their businesses.

c) For credit card providers:

Smart cards greatly reduce costs associated with scam, they enable extra added-value services to be offered to customers, creating income and closer customer connections and their off-line orders, free space on systems for other on-line activities.

Automated Teller Machine (ATM)

In the present day era we have noticed that machines have changed man in many domains. They are not only faster, but also have became more reliable and propitious. It could perhaps been only a fictitious fantasy to be developing a device that could sketch and deposit cash by the stroke of an finger several decades back. Along with the growth of computer technology we have such machines, which offer us these services, known as ATM (automated teller machine).

These machines got made banking easier and simpler for the customers as well as the banking institutions. Customers can withdraw cash anytime from these machines by placing a greeting card and PIN Code. These machines can be stand-alone as well as part of a network, and such a network is recognized as an ATM network.

The ATM communicates through a host processor. The sponsor processor chip can support either leased lines or dial-up ATMs. Leased brand machines connect right to the host processor (of the precise bank/service provider), by using a four wire, point-to-point, dedicated telephone lines. Dial-up ATMs connect to the host processor through a standard phone line using a modem (modulator-demodulator) and a toll-free number.

The ATM forwards the exchange information to the Number Processor, these details is then forwarded to the Bank that issued the greeting card, if the card holder requests cash, the coordinator processor initiates an electric funds transfer to take place from the clients checking account to the number processor's profile. The processor will send an endorsement code to the ATM authorizing the machine to dispense the cash.


When the client inserts his ATM cards in the ATM machine he's asked to enter his pin amount and the amount he requires along with the notes he wants. The customer attracts the money and will get it plus a receipt. The customer's bank account is debited and the bank account is acknowledged immediately. The information would go to the branch serve and is updated. Exactly the same information, at exactly the same time, is modified in the top office server.

After concluding the transactions are paper and reported time and date wise, amount smart and ATM wise. All these reports receive to the managers and copies are sent to relevant branches.

Working of ATM after closing

(Courtesy: Muslim Commercial Lender, Islamabad)

The main difference between working time and after closing is that during the working hours the information is updated real time. After concluding of the branch, when a transaction is manufactured, the info is directly kept up to date in the head office computer, which works 24 hours per day. These details is stored till the next morning when the machine of the branch is fired up and the information is up to date in the branch server. This technique is performed in batch. The branch balances its accounts before starting its ATM systems again.

4. 3. The details of banking companies: specific interpretation and research is given in the next paragraph:

Following are the four lenders under study which can only help to understand comprehensive about the Digital Banking scenario in Pakistan and the services being provided by these lenders electronically: -

  1. Abn-Amro bank
  2. askari commercial bank
  3. muslim commercial bank
  4. habib bank or investment company limited

4. 3. 1. Abn-Amro Bank

ABN AMRO Lender Pakistan was proven in 1948 and was the first overseas lender to be granted a license by the federal government of Pakistan. During the last five years, ABN AMRO has significantly increased its profile in Pakistan, and it is ranked amongst the top 3 foreign lenders in the domestic market. THE LENDER has strategically located branches in three of the country's main business centers: Karachi, Lahore and Islamabad.

Abn-Amro Bank or investment company Station

The Electronic BANK OPERATING SYSTEM offers enough security features in all respects of system gain access to, orders' authorization, databases security, transmission and communication as well as authenticating orders and data. These capacities are well manifested by using different methods like using individual I/D and Passwords, defining user's privilege, using inherent built-in security features from MS Gain access to and House windows NT, randomly made dynamic MAC and DES key as well as using Smart Card to further the security. From validation and security perspective, it will ensure no repudiation of instructions at anybody time. Lastly in conditions of the communication standpoint, information regarding in country won't flow out of the country aside from cross-border information.

With a system that offers such limited security, it will be apparent that customers should have full confidence in using the system for initiating orders. This will advantage in fast turnaround time for orders processing, more efficient in creating obligations training and minimizing errors thus results in cost saving. Apart from just initiating payments, customers can have access to their global username and passwords that helps to make fast and correct business decisions.

By bringing out and emphasizing state-of-the-art technology to the financial system, it will help to boost the people's self-confidence and at exactly the same time attract more traders into the country. This would ends in the contribution to the stabilization of the country's economy.

Businesses today count greatly on ready usage of essential financial information to be able to stay ahead. ABN AMRO Electronic Banking System allows commercial customers to do their bank in the capability of their own office buildings and communicate straight with the various branches of the lender. Many benefits can be derived in using Electronic Banking both for the customers and the lender.

A) Advantages to Customer

  • Global account information is at the fingertips, so that customer's can make instant, appropriate business decisions.
  • Investment opportunities can be maximized by monitoring and moving funds into interest-bearing accounts, time deposits and right away money market.
  • Customization to own must meet business goals of enhancing efficiency and reducing costs.
  • Easy integration with existing back-office applications and system.
  • Turnaround handling time for ventures is a lot shorter.
  • Through record integration or pre-defined insight, it increases reliability and minimizes mistakes.
  • Transactions can be created much faster.

B) Advantages to Bank

  • Increased efficiency insurance firms more right through processing to the back-office system.
  • Increased cross-sell opportunities.
  • Reduce workload in functions as the amount of automation raises.
  • Reduce cost.

4. 3. 2. Askari Commercial Lender, Ltd

Askari Commercial Bank or investment company Limited (ACBL) is a scheduled Loan provider operating under the certificate of State Bank or investment company of Pakistan (Central Standard bank of the Country). ACBL's main shareholders are Military Welfare Trust (AWT).

ACBL has been ranked 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 Loan company in the private sector to voluntarily obtain this score.

ACBL has implemented the insurance policy of automation and intro of modern technology, the objectives which are to maintain efficiency, to lessen operating cost and also to help development of modern day products. ACBL offers innovative products and services to its customers like 24 hours Computerized Teller Machines, Mobile phone Bank and Automated Signature Verification System. All of the ATMs and branches in the major metropolitan centers are connected through state-of-the-art Dish based mostly Communication System offering real time a day service.

A) Computerized Teller Machine

ACBL installed its first ATM in January 1996; it is also the first Pakistani bank or investment company to begin ATM showing. The preparations with ABN AMRO Lender were manufactured in 1999 and because of this ATM network writing experience, Habib Bank Limited, also suggested to join this network, and today this network is operational between all three finance institutions. Presently this network consists of 61 ATMs.

Almost 44, 000 customers of the bank hold ATM cards. Total transactions completed during the yr 2000 were 713, 263 out which 430, 241 were made through ATMs.

Askari Bank's ATM service is recognized as the "ASKCASH". It major 24 hours services are:

  • Cash Withdrawal
  • Deposit
  • Balance Inquiry
  • Fund transfer
  • Utility monthly bill payment
  • Accounts statement
  • Change pin

B) Communications

Online Bank without communication is not possible. Communications includes the marketing communications links between the HQ and the branches, which in the case of Askari Bank is with a private satellite based mostly network.

In the top Office, there are two types of network communications available - Wide Area Network marketing communications between the HQ and the Branches and an area Area Network for internal Head Office computer communications. That is both useful as it allows the utilization of a limited number of computer resources by a huge number of computers, which is also convenient, as these exact same computers can not only communicate among themselves, but can also be used as terminals for the bank servers.

The Askari Lender Branch Network has widened to 28 branches. All the ATM and Inter-branch Ventures are being processed through the private wide area marketing communications network. Hence, it is essential that the network run around the clock. For this function, the bank's main bank server and a back up have been installed in the Communications and Control Room. They both work concurrently, so, if any problem occurs in one of the systems then your other one will automatically take-over and the network is constantly on the work without the interruption.

Internet Bank at ACBL

Following services are associated with internet bank provided by Askari Loan company:-

  • Account Information
  • Balance Inquiry
  • Transfer of money within the same branch

askaribank. com. pk

A) Advantages to Bank

Rises efficiency of standard bank insurance agencies more in a straight line- forward trades.

  • Reduces work load
  • Reduces over-all costs associated to cater customer demands.

B) Advantages to Customers

  • Consumers may use their computer systems and a cell phone modem to dial in from home or any site where they have access to your computer.
  • The services are available seven days a week, 24 hours per day.
  • Transactions are performed and validated quickly, however is not instantaneously. Processing time is related to that of an ATM exchange.
  • And the number of trades available is fairly broad.

4. 3. 3. Muslim Commercial standard bank, Ltd

MCB is in its over 50 years of operation has a network of over 1, 200 branches all over the country with business establishments in Bangladesh, Sri Lanka and Bahrain. The branch break-up province wise is Punjab (57%), Sindh (21%), NWFP (19%) and Baluchistan (3%) respectively.

MCB focuses on three key businesses particularly Corporate, Commercial and Consumer Bank. Corporate customers includes general public sector companies as well as large local and multi-national concerns. MCB is also providing to the growing middle class by providing new asset and liability products

Automated Teller Machine

The branch provides 24 hour bank convenience with the major ATM network in Pakistan covering 9 places with 80 ATM locations. The MCB programmed teller machine launched in 1995 is a way of providing customers with 24 hour cash convenience.

With the MCB ATM 24 hour cash credit card MCB customer can:

  • Access 80 ATM machines in 11 major metropolitan areas in Pakistan
  • Select between two dialects Urdu/English for the main one screen transaction
  • Withdraw cash
  • Contact 24 hour MCB ATM help line

These are Spanish made NCR ATMs, but now the Bank ideas to replace these ATMs with new IBM ATMs, that have following improved features

  • Multi Money withdrawal
  • Sound Oriented
  • Touch Display screen system
  • Printer service for Lender statement

The Bank happens to be using PTCL leased lines for online Banking and ATMs.

MCB Call Center (Telephony Banking)

Customer must dial MCB's Call Middle from his/her office or home or wherever he/she is actually. It offers basic bank services for customer's convenience, getting rid of the need for a person to make unwanted trips to your branch.

A) Services Available through MCB Call Center

ATM Services

  • ATM Lost / Stolen Reporting
  • ATM Purchase Details, History & Complaints

Other Services

  • Product Information (receive details through fax, Text or email -authorized users)
  • ATM Locator (receive details through fax, Text message or email -listed users)
  • Branch Locator (receive details through fax, Text message or email -recorded users)
  • Tele-banking Services Management i. e. TPIN change, Stop / Unblock service.

Intranet for Commercial Customers

Muslim Commercial Standard bank also offers Intranet facility for its corporate customers. To carry out transactions, the organization customer links to the state site of bank. On the web site there is a website link for Intranet customers. The client logs on to Intranet by giving individual name and password. Each customer is given a particular name and PIN or security password that is usually kept confidential. Corporate customers can check their balances any moment, they can carry out transfers to other accounts and all sort of transactions without going to the lender. This facility gives corporate customers the advantage to check their balance at any time of your day. The corporate customers having offices where there is no M. C. B branch can effectively use this facility to handle various transaction procedures.

4. 3. 4. Habib Bank or investment company, Ltd

Today, HBL has more than 1, 700 branches all over Pakistan and occurrence in 26 countries across five continents. HBL released products such as BANK CARDS, ATMs, Travelers Cheques, etc. , to the Pakistani market.

Electronic Banking Situation at Habib Lender, Ltd

Although Habib Bank or investment company offers ATM services however when it is compared with other overseas and private banks in terms of other technological services, it is found that Habib

Bank is lagging way behind. This is due to its totally different customers and also scheduled to large operations and above all can be since it is a government owned bank.

Whatever the issues may be, it is recognized that to endure in today's fierce competition of banking industry, one must come up with progressive products and offerings.

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

Habib Bank or investment company ON-LINE Easy Access

This method of On-Line bank has linked 65 branches nation wide. The assistance that are being proposed by this are:

  • Inter-branch transaction
  • Cash transfer
  • With-drawls
  • Deposits


Electronic-Banking is actually global in both idea and realization. An incredible number of individuals and companies, round the world, are already transacting by using advanced electric banking technology. E- Banking is not really a futuristic dream. It is happening now and it is happening fast, numerous well-established success stories and instances.

This report emphasizes the actual fact that on-line accessibility, awareness, frame of mind towards change, computer and Internet access costs, rely upon one's lender, security concerns, simplicity and convenience are the major factors influencing the adoption of Internet lender services in Pakistan

The impact of E- banking will be pervasive, both on companies and on society as a whole. Bank that choose to regard it only as an "add on" with their existing means of conducting business will gain only limited advantage. For those bankers that are prepared to change their organizations and business functions to totally exploit its potential, e- banking offers the probability of breakpoint changes. All the banks, including those that try to disregard the new technologies, will then be influenced by these changes in market segments and customer goals.

Banks, wishing to become a member of the E-banking, could continuously examine the risks and opportunities created by digital banking. Their it divisions must make enabling functions and technology.

Evidence also shows that there are greater promotional attempts for banks to make greater awareness of E-banking and its own benefits is very important to the success of Internet banking services patronage.

In Pakistan Electronic Bank continues to be in its early on stage. From the study it is found that almost all the international and private bankers have the technology to offer new and innovative electronic bank services. But the situation is consumer adaptability to the technology. The task of foreign lenders could be to create an awareness campaign regarding the benefits of E-banking to everyone. This can be done by offering more user-friendly digital products and services.

As considerably as State Possessed banks are worried it could be concluded that finally these banking institutions have joined the time of E-banking. Habib Loan provider, Ltd one of the national banks has began to offer E-banking center named as Easy Access to its customers. It would have been more appropriate for Habib Loan company if it got tapped commercial customers in the beginning by supplying a unique product to that category of customers.

ABN-AMRO standard bank, Askari Commercial Loan company Ltd and Muslim Commercial Loan provider Ltd are very successfully functioning and offering e-banking services. Point out Owned banking institutions could benchmark the E-banking activities of such banks before offering E-banking products and services.


1. Role of Government

  • The government
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