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An Assessment of Alternative Delivery Channels

Used in Bangladeshi Banks

December 18, 2016


Presented by:
Md. Tazim Kabir
ID- 28
Ridwan-Al-Mahmud
ID- 27
Farhana Sharmin Mithi
ID- 01
Md. Sakib Bin Abdul Hannan
ID- 26

Prepared for:
Atul Chandra Pandit Tanweer Mehdee
Assistant Professor Assistant Professor

BIBM BIBM
Content

Alternative Delivery Channel

 Role of ADC in Banking Channels

 Features of Alternative Delivery Channel

 Various Means of Alternative Banking

Current Scenario of Alternative Delivery Channels in Bangladesh

Bangladesh Bank’s Guideline for ADC Operations

 Future of ADC in Bangladesh

 Risks & Challenges Involved in ADC Systems


Alternative Delivery Channel
Role of ADC in Banking System

Alternative way other than a traditional delivery or distribution


channel

Methods for providing banking services directly to the customers


ADCs ensure the smooth flow of regular transactions
Provide banks with higher profits with lower operational expenses
and transaction costs

Ensure convenience for customers


Features of Alternative Delivery Channels

Technology dependency – Highly Depending on Technology and Hi-Tech


Communication System

Round the clock service – Provides 24/7 Banking service

Multichannel banking - ATM, core banking, Mobile banking, Internet


banking, Phone banking, POS terminals, Credit and Debit cards etc.

Lack of Face to Face contact - Banking services via virtual means of


e-banking i.e. internet banking, mobile banking, ATM, etc.

Cost effectiveness - ADC has introduced lower cost banking services


at best possible way

Geographical reach - Internet Banking / E-Banking Offers customers to


get banking service from “anytime, anywhere, anyhow”

Virtual banking - ADC has reduced Branch Banking and stress of queuing at
Branch, Ex : Internet Banking
Various Means of Alternative Banking
WHO/WHAT CUSTOMER SAMPLE
CHANNEL NAME INTERACTS WITH TO FUNCTIONALITY
TRANSACT OFFERED BY

Cash out, balance


ATM ATM enquiry, payments,
cash deposit
Computer, phone, tablet, Enquiries, transfers,
Internet banking
kiosk payments
3rd party agent,
Cash in, cash out,
Agent banking merchant, phone, POS,
payments
mobile
Extension services, Account opening,
Bank staff: loan officer,
(field staff, mini cash in, cash out,
EMI collector, other FSP
branch, branch on loan applications,
staff, POS, mobile
wheels) enquiries
Phone Enquiries, transfers,
Mobile banking
payments
Phone, computer,
E-wallet
merchant, kiosk, ATM,
(m-wallets, Cash in, cash out,
agent, card
prepaid cards, payments, transfers
store cards)

Phone, customer service Enquiries, transfers,


Call center
representative payments
Current Scenario of Alternative Delivery
Channels in Bangladesh-ATM & POS Machine

July-Sept'15 Oct-Dec'15 Jan-Mar'16 Apr-Jun'16 July'16 Aug'16

No. of ATM (in


6828 7839 8184 8517 8582 8647
actual as on)
No. of POS (in
29188 30336 30281 32270 32364 32466
actual as on)

No. of
July- Apr-
Customers (as Oct-Dec'15 Jan-Mar'16 July'16 Aug'16
Sept'15 Jun'16
on)

Internet
1508071 1525642 1385262 1436837 1446089 1465094
Banking

Mobile Banking 31145050 34303615 34808873 36333933 36775286 37505728

Agent Banking 54802 97037 167111 261693 299023 338864


Current Scenario of Alternative Delivery
Channels in Bangladesh

 Dutch Bangla Bank- Market leader for establishing the highest number of ATM (4279) as well as POS
machines

 Limited ATM booths of State owned banks as well as Foreign commercial banks

All most all banks have SMS banking facility

 Most of the PCBs and FCBs have 24/7 call center arrangements

 EFTN facility is being provided by all PCBs other than Islami Shariah based banks, FCBs as well as few
SCBs

 All PCBs and FCBs except SCBs provide credit cards to their customers

 Dutch Bangla Bank and few other banks have mobile banking facility

 Dutch Bangla Bank, Bank Asia, Mutual Trust Bank, BRAC Bank and Agrani Bank have Agent facility for
their customers located in remote areas
Current Scenario of Alternative Delivery Channels in
Bangladesh

Credit Card Transactions of PCBs & FCBs: Debit Card Transactions of All Types of Banks :
2015-2016 120000 2015-2016

100000

80000

60000

40000

20000

ATM (Local+Abroad) POS(Local+Abroad)


E-Commerce (Local+Abroad)
Bangladesh Bank’s Guideline for ADC Operations

Guideline for ATM Guideline for Guideline for Guideline for


& POS Internet Banking Payment Cards Mobile Financial
Service & Agent
• Installing Anti • Installing secured BankingLimit-
• Implementing 2-FA chips with multiple • Transaction
Skimming solutions for all types of transaction
payment
• Appropriate financial transaction application for frequency limit,
measures for the • Hardware/Software storing sensitive fraud and AML
safeguard of token for fund data checks
customer’s valuable transfer • SMS Alert Service • Opening mobile
information like • Monitoring Password • Payment system account with
PIN number etc related security for requiring proper KYC
• Providing adequate customer’s prior • Agent shall not
authorization make any payment
training to the
before payment of cheque
staffs for security
practice • One time Password
(OTP) system/2 FA
for transition via
internet
Future of ADC in Bangladesh

1. Transactions Through
‘Flagship’ Branches
Mobile (Mobile APP,SMS
etc)
2. Financial Advises
through Video Chat with
Experts
Expanded ATMs
3. Widespread usage of
digital cash.
Risks Involved in ADC

Legal Operational Technological Compliance Reputational


Challenges

• Seniors resist new technology, does not appear


to apply.
Demographic • Banks assume older customers are not
interested
Disparities • “why don’t you use your phone?” but “would
you like to see how you could save time?”

• Banks face up to 300 malicious software


attacks a day
Malicious • 60 percent of them by the local hackers

Software • An orderly infrastructure should be adopted


to maintain the security of the different
banking channels

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