Uni

ver
sit
yofTur
bat
6t
h
Semest
er

Submi
tt
edt
o:_
___
_Si
rMussadi
q
Submi
tt
edby
:__
__Shahj
anI
nay
at,
Gul
zarAl
i&Par
veenNasi
r

Subj
ect
:__
___
___
__Fi
nanci
ali
nst
it
uti
onsandMar
ket
Depar
tment
:__
___
__Economi
cs
Topi
cti
tl
e:_
___
___
_El
ect
roni
cbanki
ng&i
tspr
ospect
s
Submi
ssi
ondat
e:_
___ /
10/
2022
 El
ect
roni
cbanki
ngi
nPaki
stanandi
tspr
ospect
s
Def i
niti
onofE- Banki ng
Thet erm el ect roni cbanki ngmeansdi fferentthi ngst odiffer
entpeopl e.Different
author sdef inedi tindi fferentway sbasedont hei
runder standingoft heappl i
cat i
onof
electronicbanki ng.
Ther ear edi fferentexpl anat i
onsofel ectronicbanki ngorE- banki ng.Theyi ncludet he
foll
owi ng.
 E- banki ngi sonl inebanki ng(ori nternetbanki ng)whi chal l
owscust omer sto
conductf i
nanci al tr
ansact ionsonasecur ewebsi t
eoper atedbyt heirretailorv i
rt
ual
bank, cr edituni onorbui l
dingsoci ety.
 Anot herdef ined, e-banki ngi sser v i
cet hatal lowsanaccounthol dert oobt ain
accounti nf or mat ionandmanagecer t
ai nbanki ngt ransactionst hroughaper sonal
comput erv iaf i
nanci alinstitution’swebsi t
eoni nternet.
 E- banki ngi st heaut omat eddel i
veryofnewandt raditi
onal bankingpr oduct sand
ser vi
cesdi rect l
yt ocust omer st hroughel ectr
oni c,interacti
v ecommuni cati
on
channel s,formanyconsumer s,electroni cbanki ngmeans24- houraccesst ocash
throughanAut omat edTel lerMachi ne( ATM)ordi rectdeposi tofpaychecksi nto
checki ngorsav ingaccount s.Butel ectroni cbanki ngnowi nv olv
esmanydi fferent
transcat i
ons.El ect r
oni cbanki ngal soknownasEl ectr
onicFundsTr ansf er( EFT)
basi cally,itist heuseofel ect r
oni cmet hodsormeanst otransfermoney
elect r
oni callydi rect l
yf r
om oneaccountt oanot heraccount ,ratherthanbycashor
cheque.
Featur esofE- banki ng
o Fast erTr ansact ions
o Lower st ransact i
oncost
o Pr ov ides24/ 7ser vi
ce
o Reducest hechanceofer ror
o Dev elopsl oy altyincust omer s
o Remov et hegeogr aphi cal barriers
o Pr ov idebet terpr oduct ivi
ty
o Reducesf r audsi nt ransact i
ons
Wecanuseel ect ronicf undst r
ansf erf :
or

 Wecanwi thdrawmoneybyanATM machinewi t

haper sonali
dent
if
icat
ionnumber
(PI
N),forourconveni
ence,dayorni
ght
.Wecangui deourbankorcredi
tuniont
o
payautomatical
lymonthl
yutil
it
ybil
l
sfr
om ouraccount,
orourautoloanevenour
mortgagepay ment.
 Wecanbuyf ood, f
uelforourper sonalt
ranspor
tandothergoodsatthepurchasi
ng
poi
nt,usi
ngacr edi
tcardr atherthancash.
 Wecanuseapr epaidsmar tcardembeddedf orourdai
lypurchasi
ngli
kepayphone.
Tol
lexpenses,dail
ycollegeex pensesoranybookstor
es.

Introduct ionofel ect roni cbanki ngi nPaki stan

Wheni nt ernethasent eredi nourdai lyl i
f e, themostdi mensi onsofourl ivessuch
aseducat i
on, communi cation, busi ness, et c, wer eov er shadowedbyt hisnov el
phenomenon.Accor dingt o( Richar dny angosi )i n2009ascompar et onow, banki ng
throughel ect roni cchannel shasgai nedmuchpopul ar ityinPaki stan.Thi ssy stem,
popul arlyas‘ e-banki ng’ ,prov idesf ast erdel iv er yofbanki ngser vicest oawi der angeof
cust omer .Inf or mat i
ont echnol ogyi sbecomi ngani mpor tantf act orint hef uture
dev el opmentoff i
nanci al ser vicesi ndust ry, andespeci al l
yi nbanki ngi ndust ry.Howev er
,
e-banki ngt echnol ogi escanhel pi nbet terunder standi ngcust omer ’sneedsand
cust omi zingt heser v i
ces/pr oduct saccor di ngt ot hei rneeds.
Int henewer at her ei saneedofbankcust omer st ogeti mpr ov edel ect roni cbanki ng
serv icesandal sobet terr elationswi tht hebanker s.I tisal sot heneedoft i
met opr ovide
efficientser vices/ pr oduct st ot hecust omer s.I nPaki st anhowev er,suchki ndof
elect ronicbanki nghasi n2009.Onl i
nebanki ngsy st em pr esentt ot heirconsumer saset
ofinf or mat ion- relat edbenef i
tst hatf avor st oadopte- banki ng, incl udingt hef aci l
i
tyf or
thecust omer st ocont rol theirbankaccount satanyt imeandpl aceandt oaccess
i
nf ormat ioncont entf ori nv estmentandf i
nanci ngdeci sions.Duet ot hecompet iti
on
amongt hebanksi nPaki st an, thebankswantt opr ov i
det heser vicest hatar emor e
efficient ,rapi dandenhancedt hebanki ngsy st em.Ther efor e,theobj ect iveofe- banki ng
i
st ocr eat esuchwor kingenv i
ronmentwher ecust omer scaneasi lyfindaboutt he
i
nf ormat iont heyr equi ref orper for mi ngf inanci al t
ransact i
ons.
Fur ther mor e, thegov er nmentofPaki st anf ur therpr omot edel ectroni cbanki ngwi th
thepr omul gat ionoft heEl ectroni cTr ansact ionOr di nance2002.Thi slandmar kst ep
prov idedl egal recogni tionofdi gital signat ur esanddocument at i
onr educi ngt her isks
associ atedwi tht heuseofel ect ronicmedi ai nbusi ness.Atpr esental mostal l
commer cial banksi nPaki st anhav eset upt hei rownATM net wor ks, issuedebi tand
credi tcar dsandhav ej oinedoneoft het wooper atingATM Swi tchNet wor ks.
Accor dingt okol achi ,(2006)Paki stani bankspr ov i
dest hef oll
owi ngonl inebanki ng
serv icesandpr oduct s.
a)I nqui ry:Accountst at ementi nqui ry, accountbal ancei nquiry ,checkst atementi nqui r
y,
fixeddeposi tinqui ry,fixeddeposi tinqui ry .
b)Pay ment s: Transf eroff unds, credi tcar dpay ment s, directpay ment s, utili
tybi l
l
pay ment s.
c)Request :Chequebookr equest s, stoppay mentr equest s,demanddr aftrequest s,
newf i
xeddeposi tsr equest s.
d)Downl oad: Cust omerpr ofi
le, stat ementdownl oad, otherinf or mat ionandgui delines
 downl
oad

Historicalv i
ewpoi ntofE- banki ngi nPaki stan
I
nPaki stan, theel ect ronicbankswer ei ntroducedi n1987.Habi bBankLi mit
ed
(HBL)i nstall
edt hef i
rstaut omat edmachi ne( ATM)i nPaki stannear l
yadecadeago;
publicwasnotf ami li
arwi thATMsandATM car dst hatgr ewsl owl y.Ine- banki ng
progress, statebanki ngofPaki st ancont ribut edal ottot hef or mat ionofnat i
onal
exchangei n2002, wheni tpr ov idedt hebasi s, env i
ronment ,
andpol icyf oranonl ine
bankingsy stem ( Zubar i
,2017) .Af t
er1999, t heNat ional BankofPaki stant ooknot eof
theimpor tanceofe- banki ngpr oject sATM andcar ds,2002SBPi nstruct i
ont hroughal l
bankst ot heiraccounthol der sandconnect edt oanyoneoft het woswi t
ches( 1li
nkand
MNET)wi t hthei ncreasi nggr owt hofmonet ar ytransact i
ons, itwasf elttot hesel ecti
on
mor ebenef i
tsf rom e- banki ngf ormaki ngbanki ngeasi er,faster ,cost -effectiveand
rel
iable.Occasi onal l
y ,i
ncont inuat ionoft hat1- li
nk, vi
saanduni onpaycar dswer e
offeredtoi ncr easet heav ailabili
tyofpl asticcar dsi nandout sideof
Pakistan.(Paki stan, 2017)
Howev er,thi sbel owt abl epr ov i
desanov erviewoft hedev el opmentofel ectronic
bankingi nPaki stan.I tshowst hatt henumberofonl i
nebr anches, ATM net wor ks,debit
andcr editcar dhol der shav ei ncr easedshar plysi ncet hey ear2000.TheSBPannual
report2005showst hatdomest icbanksar et hemaj orsuppl i
erofATM f acil
iti
eswhi l
e
forei
gnbanks, mai nl yCi ti
bankandst andar dchar tered, domi nat et hecr editcar d
businessi nPaki stanandaccountf orov er95%oft otal accountt r
ansact ions.

El
ect
roni
cBanki
ngSt
ati
sti
csi
nPaki
stan

I
tem 2000 2001 2002 2003 2004 2005 June2006
Noofonl
i
nebr
anches 322 450 777 1581 2475 3265 3555
NoofATMs 206 259 399 552 786 1217 1612
Noofdebi
tcar
dhol
der
s(000) 240 415 736 1257 1874 4257 4999
Noofcr
edi
tcar
dhol
der
s(000) 217 292 369 397 808 1257 1512
(
Sour
ces;
SBPAnnual
Repor
t,2006,
p.65)

Drawbacksofelectronicbanki
ng
 E-banki
ngisdiff
iculti
nadopti
onoft echnol
ogy
.
 Feartousenewt echnol
ogy.
 Highercostoftechnologyone-banking.
 Lackofpreparedness
 Di
ff
erentr
est
ri
cti
ononusageoft
echnol
ogy

Adv
ant
ages
Onli
nebankingisver
ysuit
abl
eandconveni
ent.I
tall
owspeopletopaythei
rbi
ll
sand
maket r
ansact
ionsanyt
imeduri
nganyti
meoft hedayandweek.E-banki
ngsyst
em
nevercl
osesanytimebecausepeopl
ecanaccessitt
hroughi
nternet
.Therewi
ll
beno
matterinwhi chcount r
yy ouareorany whereint hewor l
d.Customerscanmakeonl i
ne
tr
ansactionandhandl ey ourfi
nanceswithconv enientl
y.
Secondly,e-bankingser vi
cesarev er
yrapid,effecti
ve,enhancedandef f
ici
ent.E-
bankingsystem alsogi vestheopt i
onoftransact i
onmaki nginthedif
ferentbank
accountsfrom awebsi te.Mostlye-
bankingwebsi t
esarecompat i
blewithprogramslike
Microsofti
nfr ast
ructure,whichmakesor ganization’
sasset smorevaluable.

Cur
renti
ssuesofe-
banki
ngi nPaki
stan
Someofthemainissuesofe-banki
ngi
nPaki
stanar
einbel
ow
1)I
T&Tel
ecommuni
cat
ioni
nfr
ast
ruct
urei
ssue

I
nfr
astructur
eofinf
ormati
ontechnologyandtel
ecommuni cati
onplaysvit
al r
oles
f
orE-banking.El
ect
roni
cbankingi
sf ul
lybasedonI.
Tandt elecommunicationbut
i
nPakistanthebasi
candrapidinf
rastruct
urei
smissingduet owhiche-banking
i
snotgai ni
ngtoomuchsuccesshereascompar edtoforeigncountr
ies
2)Scal
abi
li
ty/
capaci
tyi
ssue

Scalabi
li
tydefi
neas,‘
’ t
heabil
it
ytoadequatelyhandlethei
ncreaseddemandfor
system r
esources.
’
’InPakist
an,technol
ogyisdesignedfori
nternetuseasmuch
aspossiblebutmerelyopensthegatesforpubli
c/cust
omeraccessandev en
thosewhobankshav eanupgr adedsystem,fai
ltoaccountf
orf utur
egrowt
h.
3)Websi
tedesi
gni
ssue

InPaki
stan,t
her ear
emanybankst hatpr
ovidetheservi
ceofe- bankingbutthey
cannotdesi
gnt hei
rwebsiteaccordi
ngtotheneedanddemandofcust omers.
Theyalwaysfocusont hei
rowndemandswhi l
etheyar
edesi gningthewebsite
fort
hepurposeofe- banki
ngwhi chisdi
ff
icultt
ounderstandableandcr eat
e
completel
yintheuseofe-banking.
4)Secur
it
yissue

Securi
tyi
ssuei
soneofthemajorissuesforelectronicbanki
ng.I
ncaseofany
fi
nanci
aldamagest
othecustomer,thebank’sr eputati
onmustbespoiled.
Securi
tyri
ski
samajorthr
eatfr
om thehackers, whocanusedi ff
erenttypeof
i
nformati
onofpubl
i
cforsomecr i
minalacti
vit
y .Somet i
meshackershikethe
passwordsoft
hecust
omerandt heftt
hei
rmoneyorsomesecr etinfor
mat i
on.
5)Tr
usti
ssue

Trustplayskeyrolefore-banking,butthelackoftrusti
sthemaj orissueinthe
growthofel ect
roni
cbanki nginPakistan.Thereisnosingl
ef or
mul athatcanbe
useinsteadoft r
usttoattaintheattracti
onofcustomer.E-banki
nghassome
di
sadv antageduetowhi chcust omer sstoptotr
ustthatbankandt heirser
vices
6)Moneyl
aunder
ingi
ssue

InPakist
anmoneyl aunder
ingusotherhurdl
einthesuccessofe- banking.
Moneyl aunderingoccursbecausel
ackoff acetofacei
nteract
ionofbankwi th
theircust
omer s.Therati
oofmoneylaunder i
ngisconti
nuouslyincr
easesdayby
day.Issueli
ket hatcandir
ectl
ydamaget hereputat
ionofbankandf urtherleads
tosomeser iousl egal
probl
ems.
Thus, i
nthisgl obali
zati
onwor d,e-bankingisanimportantaspectof
developmentf orbankingsect or.Bankingsect orcanmakei t
scust omerl
oyalby
sol
vingthesei ssueandchal lenges, andpr ovi
demor eeasetoi t
scustomer.The
banksshouldmor ekeenl
yconsi dercustomer sdemandandpr eferencef
orthe
successfulr
eact ionandf eedbackf rom public.Thebankshouldmustbe
enhanced,effectiveandef fi
cientitse-bankingservi
cestotheircustomer
sinthe
market.

Prospect sofE- banki ng

Thei mpl ement at ionofe- banki ngi sbenef icialforbanki nmanyway sasi treduces
costtobanks, impr ovescust omerr elation, i
ncr easet hegeogr aphi calreachoft hebank,
etc.Thebenef itsofe- banki nghav ebecomeoppor t
uniti
esf ort hebankst omanaget heir
bankingbusi nessi nbet terway .
Howev er,despi teofv ar iouspr oblemst hatar epr evaili
ngi ncont extofe- banki ngi n
Pakistan, thef ollowi ngoppor tuni t
iesar emot i
v at i
ngt hemar ket si mplement inge-
banking.
a)Unt appedRur alMar kets:cont ri
but i
ngt o70% oft het ot al popul ati
oni nPaki stan
isl ar gelyunt appedmar ketf orbanki ngsect or.Inal l urbanar easbanki ngser v i
ces
ent eredbutmaj orityofPaki stani sti
llli
v i
ngi nrural ar easl iket hepr ovinceof
bal ochi stan.
b)I ncr easi ngi nter netuser s&comput erli
t eracy :Tousei nter netbanki ngi tisv ery
impor tantori nitial r
equi rementt hatpeopl eshoul dhav eknowl edgeabout
int ernett echnol ogysot hatt heycaneasi lyadoptt hei nter netbanki ngser vices.
Thef asti ncr easi ngi nter netuser sinPaki stancanbeav er ybi goppor tuni tyto
at tractmor ei nter netuser st oadopti nter netbanki ngser vices.
c)Wor thycust omerser vice:wor thycust omerser vicesar et hebestbr and
ambassadorf oranybankf orgr owi ngi t
sbusi ness.Ev er yengagementwi th
cust omeri sanoppor tuni tyt odev elopacust omerf aithi nt hebank.Whi le
incr easi ngcompet it
ioncust omerser vi
ceshasbecomet hebackbonef orj udgi ng
t heper for manceofbanks.
d)Paki stanicust omer s:Thegr owi ngPaki stani banki ngsect orwi thitsst ronghome
count ylinkages, seekauni quecombi nat ionofPaki stani et hicall
yandgl obal
st andar dst hatof fersav aluableni ceoppor tuniti
esf orPaki stani banks.The
bi ggestoppor tuni tyf ort hePaki st
ani banki ngsect ort odayi sthePaki stani
cust omer s.Demogr aphicshi f
tsi ntermsofi ncomel ev el andcul turalshi ftsin
t ermsofl i
fest y l
easpi rat i
onsar echangi ngt hepr of i
leoft hePaki stani cust omer .
Thi sisandwi llbeakeydr i
verofeconomi cgrowt hgoi ngf or ward.
e)Fi nanci all i
teracy :fi
nanci all
iteracyandeducat i
onpl ayacr ucialroleinf inanci al
incl usion, andi ncl usi vegr owt h.Ast udyr epor tedt hatt her ei ssigni f
icanti mpact
 off i
nanci al l
it
eracyonuseofi nternetbanki ng, ifcust omersar enotf i
nanci ally
educat edt heywi llsimpl yavoidusi ngnewonl i
neser vicesandnotchanget hei r
traditi
onal wayofbanki ng,thusbankswi llnotbeabl et oconv ertuser stot hei r
newonl inebanki ngst rategies.Variousgov ernmenti nst i
tuti
onsl i
ke, RBI,SBI,IRDA
andv ari
ousot hermar ketpl ayershav etakenanumberofi ni
tiati
v esonf inanci al
educat ion.Theyhav epr epar edaschool curri
cul um al ongwi t
hv ar i
oust opics
i
ncl udingi nternetbanki ng,bankingpr oductandser vices,netbanki ngt oeducat e
theschool student s, collegest udentswor kingexecut ives,middlei ncomegr oup,
homemaker sr etir
edper sonnel ,
selfhelpgr oupset c.
f
) Compet i
tiveAdv ant ages:t hebenef i
tofadopt inge- bankingpr ov i
desa
compet iti
veadv antaget othebanksov erot herpl ayers.Thei mpl ement ationofe-
banki ngi sbenef icial forbanki nmanyway sasi tr educescostt obanks, impr ove
cust omerr el
ation, increasest hegeogr aphicalr eachoft hebank.So, benef i
tofe-
banki ngbecomet heoppor tuniti
esf ort
hebankst omanaget heirbanki ng
busi nessi nagoodway .

Recommendat
ions
Banksar emor ecomf ortableandsecur etransact i
ont hroughinternetinITsy st
em.
Devel opsomenewdi ff
erentt hingswhi chwi llnotfaceanypr obl
em r egardingIT
becausesomet i
meATM’ shav esomepr obl emsl i
ke, hackingofpasswor dsand
unaut horizedaccesst otheuser ’
saccount .Introductionofnewt echniquest hat
eli
mi natet hechanceofhackanyt r
ansaction.Makesur ethatthecomput ersystem of
thebanki susedoradmi nisteredonl ybybankempl oyees.Nev erprov i
det he
unaut horizedaccesst obanksy stems.Al way susepr opertymaintainedandser viced
comput ersy st
ems.Theoper atingsy st
em shoul dbecompl etewitht helatestupdateof
secur i
tysof twareatnormal interval.Acti
vatet heaut omat icupdatesandr emainin
touchwi t
hy oursoftwareser vicerepresentat i
veorsuppl i
erregardingthesecur i
tyissues.
Uset hel atestvir
usprotectionpr ogrammedwi thregul arautomaticupdat esagainst
spyware,virus,andacti
vatesaper sonalf
ir
ewall
forpr otecti
onofyourcomput
ersyst
em.
Maintainyourconf i
denti
alinformati
oninasafeplace.Thus, thegov
ernmenti
sneeded
tobeact i
vet oplaythei
rroleinthesystemsofe-bankingt obuil
dthe
tel
ecommuni cati
oninfr
astructureandmany mor
ewhi chshoul dnotcreat
espr
obl
em for
thee-bankingsy st
em so,thensy st
emswi l
loper
atev erywell.

Concl usion
Mostoft hefinancialbankt ransacti
onsinPaki stanwer econduct edatt hebank
branchesi npersonandmanual l
y.Thearriv
al ofICT( inf
ormat i
onandcommuni cation
technol ogy)andaccessi bili
tyofquickandt r
ust worthyinternetconnectiv
ityfrom the
l
astdecadehav eenabl edt heexpansionofe- bankingnet worksincount r
y.Thef aster
i
nter netav ail
abil
ityprov i
desmor efaci
li
ti
estobankcust omer ssuchaseasi ercash
withdr awal,fastermoneyt ransfer,webapplicati
onf orcustomer sandr educingthe
branchesofbanks.Besi det headvantages,thebanki ngsect oral
sof acedthecy ber
threatsduet ointernetconnect i
v i
tysuchast ransactionssecur i
ty,pr
ivacyofcust omers’
accountt hreatsandbanki ngsystem securit
y .
Ref erences
1.M. Rahimuddi n.(
2010),E-bankingsystem inPakist
an.www. bthse/ fou/cuppsats
2.Kol achi
,N(2006)i nt
ernetbankingsy st
em inPakist
an.Somecur ical weaknessand
suggest i
onf orimprovement .Journalofinsti
tut
eofBanker sPakistan: Vol73,No2.
3.Smi thAD; Explori
ngsecur i
tyandcomf orti
ssuesassociat
edwi thonl inebanking.
Electroni
cFi nance,2006.
4.Abbasi andzubai r(2001).“E-securi
tyissuesinPakistan”
,Spider,1august2001p. 29
5.Dani el
,E,(1999),“provi
sionofel ect
ronicbankingi
nt heUKandt heRepubl icofIrl
and”
,
i
nt ernati
onal j
ournalofBankMar ket
ing,17(2)pp72-82