Electronic or e-banking serves numerous purposes in the modern financial system. The first benefit for the banks offering e-banking services is better branding and better responsiveness to the market. Those banks that offer such services would be apparently leaders in applying such technology. Therefore, they would enjoy a better brand image.
The other benefit is the potential to be measures in monetary terms. The main goal of every company is to maximise profits for its owners and banks are no exception. Automated e-banking services offer a perfect opportunity for maximising profits. From the clients' point of view, it means saving of time substantially through automation of banking services and introduction of better tools for managing customers' money.
The main benefits of e-banking for customers are as follows: 1) Reduced costs, 2) Convenience, 3) Speedy, and 4) Better fund management. The main advantages of e-banking for corporate customers are the reduced costs in accessing and using the banking services.
The main benefits of e-banking are: 1) Increased comfort and time-saving, 2) Quick and continuous access to information, 3) Better cash management, and 4) Private customers seek slightly different benefits from e-banking.
In a nutshell, e-banking offers so many benefits not only to the bank itself, but also to the society as a whole.
From the society's perspective: An e-banking service makes clients' access to finance from banks attractive. So the society can benefit from the development of e-finance and gradually step out of the informal sector. In particular, e-finance offers the following attractive benefits for the society: Easy use, lower costs of financing, convenience, it saves time, and operational efficiency. Other benefits include the increased efficiency, since the automation enables one to do more with less input, increased level of output and employees' satisfaction and motivation, as they do not have to toil really hard.
E-banking challenges: E-banking challenges can be identified as follows-technological, managerial and business-related.
Technological challenges: Technological challenges are related to reaching out to the clients as well as installation and maintenance of necessary hardware and software. These challenges also involve the security and website issues. The banks' data may face threats from hackers and loss of the data may be caused by things like viruses. Hackers may also transfer money from one account to another and this may make both customers and the bank itself lose money. The e-banking system involves spending of money on account of software and infrastructure as well as other costs.
Managerial challenges: When it comes to managerial challenges and organizational issues, the people in an organization may struggle to opt for the new technology, as they may feel it would lead to loss of jobs. They may also be reluctant to adopt new approaches out of fear. Another thing to consider is that the authority of an organization may need to restructure it and this may be a challenge in itself.
Every key activity in the organization needs to be supported by the top management. A supporting management will deliver the required resources. If the management does not support the e-banking project, it means that the project will lack the necessary resources and thus it is bound to fail.
Business challenges: Business challenges include the customer service. If a bank goes for e-banking, it will lose the personalised service it offered to its customers. In such a situation customers' loyalty may be reduced or entirely lost. Customers may cling onto their old habits and may not be ready to adopt any change. They may even lack the trust and hence the e-banking or e-commerce system may be under-utilised.
Legal issues may also arise from the adoption of e-banking. The organisation may be sued because of a loss suffered due to failure of its system.
Macroeconomic challenges: As the beginning of e-banking quickly changes the financial landscape and increases the potentiality for quick cross-border capital movement, macroeconomic policymakers face some challenging questions.
* If e-banking does make national boundaries irrelevant by facilitating capital movements, what does this imply for macroeconomic
management?
* How is monetary policy affected when, for example, the use of electronic means makes it easier for banks to avoid reserve requirements, or when business can be conducted in foreign currencies as easily as in domestic currency?
* When offshore banking and capital flight are potentially only a few clicks away, does a government have any leeway for independent monetary or fiscal policy?
* How will the choice of the exchange rate regime be affected, and how will e-banking influence the targeted level of international reserves of a central bank?
* Can a government afford to make any mistakes?
* Will the spread of e-banking impose harsh market discipline on governments as well as on businesses?
Answers to these questions fall into two developing strands of thought. Firstly, the hi-tech revolution, particularly the expansion of e-money but also more broadly, electronic advances in banking practices, could result in decoupling of households' and firms' decisions from the purely financial operations of the central bank. Thus, the ability of a monetary policy to influence inflation and economic activity would be threatened.
Secondly, as e-banking expands, financial transaction costs can decline significantly and the effectiveness of the domestic monetary policy may also be affected.
Regardless of the challenges, it would not be prudent to shut the door on expansion of e-banking. When it will gain in popularity, the clients and thus the society will be benefited most. As such, the whole economy will also be benefited. So it is perfect time to make e-banking easier and acquaint the financial institutions and fourth generation banks with it. Before expansion of e-banking in Bangladesh, it is essential to set up internet facilities throughout the country. Electricity should also be available in both urban and rural areas. Otherwise, the people will be deprived of the real-time e-banking facilities.
