Bank Services-doha,nazneen,afzal And Muslem

Coping up with the ATM, Credit Card and Phone B anking in Bangladesh Mohammad Shamsuddoha Assistant Professor, Department of Marketing, University of Chittagong, Bangladesh E-mail: [email protected] , [email protected] Suraiya Nazneen Assistant Professor, Department of Finance, University of Chittagong, Bangladesh Md. Khaled Afzal Lecturer, Department of Management, University of Chittagong, Bangladesh Md. Muslem Uddin Chowdhury Asst. Lecturer, ZIIBA, USTC, Chittagong

Abstract: Banking industry is much more mature than past in Bangladesh now a days. It has excellent image of their activities. Now modern banking services are launched by the some multinationals and new local private bank like Automatic Teller Machine(ATM), Credit Card ,Phone Banking, PCM Banking, Electronic Banking, Internet Banking, TV Banking etc. Marketing and changing trend of banking services is the very vital things in modern banking sector. Some banks are trying to adopt of this changes. Some are not giving effort totally, some are launching the new ideas in this sector, and some are really trying to adopt and innovate something different. It is good to see that whole banking sector in Bangladesh is trying to follow the modern marketing concept in bank services. After launching the new innovative products like ATM, Credit card and phone banking, question is how the customer accepts the new product, which is fully associated with the technology. Keywords: Bank, ATM, Bangladesh Introduction: The word of “Bank” is incepted from Italian word “Banco” or “Bauque” or “Bancus”. The bank is very much related with money and trade. In the early stage, the definition of bank was “If any person, organization, company or corporation is doing business with money and credit is called bank”. Under the Indian Companies Act, 1913 that “A company who is capable to withdraw and deposit money through Cheque, draft, order etc. under a current and savings a/c is called bank" (M A Mannan, 1996). A British bank specialist Sir John Paget told that four criteria are mandatory for a Bank is as follows:1)who collect money from customer as a capital 2)who collect money in the name of current a/c 3)who accept cross Cheque from the customers 4) Who pay the money against cross Cheque? There are so many term in the banking industry like bank, banking, banker, client, third party, credit, money market etc. Every single term has own definition and have a function. In the early stage, the management of banking services was trying their level best to maintain basic things like deposit, withdraw etc. In addition, customers were coming to them for their own needs. The management always tried to keep happy with giving services to their clients. However, all the process was like inhouse game. Now the definition of bank is more clumsy and complicated than previous. And change their role by the demand and need of customers. They are too much customers oriented now. Bankers are going ot wards the customers now a day. These situations come through marketing process. Earlier the attitude about marketing of banking services was that it was not professional to sell one’s services and was unnecessary in the sense that traditional relationships and quality of products were sufficient to carry forward to the customers. Now bank has various modernized departments to execute the banking services more dynamically. ‘Marketing in banking services’ is one of the recent concepts in modern banking system. In Bangladesh, multinational banks are operating for long besides our nationalized, private and specialized banks. However, much of the resulting research has concentrated on providing evidence of the association between consumers’ usage patterns of ATMs and their demographic profiles (Hood, 1979; Murphy, 1983) and, more recently, consumer psychographic profiles (Stevens et al., 1986). Besides, the banking services of nationalized, private, and multinationals are different by quality of their services. Multinational banks are offering better services than others. They offer better customer services, personal financial services, corporate facilities, trade services with the help of efficient operational department, credit department,

information technology department and the most important department is the marketing department. Presently they are thinking to offer door-to-door services, 24 hours banking services with ATM machine, pay and cash management through internet services. Moreover, waiting to intr oduce intensive e banking of the multinational banks in Bangladesh. Customer always demands better services, security, and round the clock banking. Multinational banks are considering customers needs and demand in the first line of preference. Moreover, trying to offer and introduce the demanded services by the customers and changing their offering based on the needs of present and potential customers. Only a few studies regardless of research context have been conducted which focus on the attributes of innovations, as perceived by potential users (Ostlund, 1974; Taylor, 1977). Recently, a study on ATMs (Rugimbana and Iversen, 1994) utilized the Rogers’ “extended” model and was able to shed some light on pertinent strategic issues such as how retail bank consumers perceive ATM technology and how far they accept this innovation as one, which can fully and satisfactorily replace human tellers in all the banking functions handled by the innovation. However, the study stops short of comparing the relative usefulness of perceptual and demographic profiles of consumers in predicting ATM usage. Here the researchers is trying to explore ATM, Credit Card and phone Banking products which are not new for its people but it is struggling to cope up in Bangladesh. Objectives of the Study This research has taken into consideration to accomplish the following objectives:1. To spotlight on the modern banking tools in the context of Bangladesh specially ATM, credit card and phone Banking. 2. To unearth customers view point against phone banking, credit card, and ATM. Rationale: Today’s world is very much service oriented in all sector. Those who are giving much more service than others are, he will be well ahead of competition. Most of the people have some management & Marketing knowledge but do not want to execute this sort of knowledge into their own fields of business and services. The customers always think negatively towards marketing. Sometimes they do not want to realize the power and strength of modern management & market ing forces in the service oriented business. Banking service is intangible. Tangible product has own identity, weight, dimension and existence. Any body can spare time to justify those products to consume or not. Nevertheless, intangible products like ATM, Credit Card, and Phone Banking cannot be touched that is why marketing activities in banking sector is much trickier than others. The researcher gave stress on three-mentioned product, which has been launched in the banking sector in Bangladesh in mid 90’s. Still banks are struggling to cope up and customers are suffering some doubt when they are using it. There is no plethora research work on the topic that is why researchers thought that this research would add some value in this topic specially. Methodology of the Study The study covered 10 different Multinational, private commercial banks which mainly situated in the capital city of Chittagong in Bangladesh. Some of the respondents were in the capital city of Dhaka. Data have been collected through a structured questionnaire. In addition, the websites of relevant institutions has been review for updated information. In total 160 respondents interviewed during the study period who are clients of those banks for relevant products. This research has been done through desk study and primary survey. Desk study made through finding out different books, journals, and articles in the libraries. Data has been furnished through relevant statistical methods. Limitations of the study There has no plethora resear ch work in Bangladesh perspective particularly. The study covered a very limited number of organizations and respondents as well. Some respondents were neither motivated nor interested in expressing their honest opinions. The scope of the study was also constrained by limited available funding. Analysis of Findings

A. Modern banking services and the performances Modern Banking has incredible tools to motivate and encourage to their customers. In the customers corner, things is to be very easier that is why, they buy the product and take the service, which is newly incepted. Some new products, which attract to the modern banking systems in Bangladesh, are as follows:ATM Card: This is like a debit card. People can deposit their money in a bank account and they are entitled for that to withdraw through ATM card, which is applicable for 24 hours. Some banks are called ATM is 24 hours money link card. Full abbreviation of ATM is “Automated Teller Machine” which acts like a teller point in a bank who takes and gives money over the counter. ATM is same as teller point but it run automatically through identity like card and password. It does not need any slip or Cheque but it is very much based on A/C holder’s ATM card and it’s Password. Those who are entitled for ATM card, bank has provided them a password against every single card. If people insert their own card in ATM machine, machine will verify password from the cardholder . After verifying card and password, the option is wide open in the screen. In that moment customer can give command to machine to take the money, deposit the money, to show the balance, show the mini-statement, Cheque book requisition, statement request, pin number change etc. whatever people like to command to the machine, machine will do within a second. In Bangladesh, some multinationals incepted the ATM booth in Dhaka since 1992-93. The Grind lays Bank was the pioneer in Bangladesh then after Standard Chartered Bank, American express Bank, HSBC, Bank Asia and seven others local priv ate banks are the followers. Credit Cards: Credit card is such a card which is not like debit card but it is as a loan which customer can use all the time in the market, shopping, restaurants, book stall, brand shops and many others place those who are accepting credit cards. It is noted, that those who are accept the credit card and the credit card provider bank are related with some contracts that get some commission from them. It may be the 2% or 3% of the expending amount. People can also withdraw cash money from the credit cards. Some banks give some bindings on it. Most of the banks are allowing 50% cash withdrawal against the entitled amount of cardholder . It has allowed 45 days for any credit card charge amount (except cash withdraw) without charg ing any interest. If you cross 45 days cycle then you have to pay interest of 0.6-0.8% per day, which is more than 30% per annum. Standard Chartered grind lays Bank was the pioneer of local credit cards. Moreover, some other local banks like Prime Bank Lim ited and National Bank Limited give international credit cards, which is acceptable in the abroad. They are giving the credit cards by keeping security against the limit amount. The security may be the savings certificates, cash money, business goodwill etc. Phone Banking: Phone banking is such a banking, which helps the customers, does banking over the phone call to branches . It makes banking much easier than past. In addition, it is applicable for 24 hours a day. It has a hunting or provided phone number by the bank. Customers call at the number and press the password through phone set knob. People can transfer their money to the different account in same bank, command for pay order or demand draft; check the balance, request for a Chequebook, request for statement etc. It was introduced by Grind lays bank in Bangladesh then after standard chartered bank, HSBC is the follower. Now some local banks are also joining the party. Electronic Transfer System: There has some provisions for fund transfer like telegraphic transfer and the latest improvement is electronic fund transfer, which is done through the online systems. If the client has an account to a multinational or local online bank, they will be able to do fund transfer through ATM card through fund transfer applications. Multinational banks like standard Chartered Bank, HSBC etc. is the pure online bank who can easily transfer the customer’s money without paying any commission or charges for their in-house account holders. In some others foreign countries like USA and UK, many banks are arranging the combined system that people can easily electronic fund transfer to the other banks though they have maintain their account to the third party bank. Internet Banking: Internet Banking is such a banking system that is applies through internet. In Bangladesh, there has no provision and nobody launches or introduced pure internet banking yet.

People logon to the internet and open the bank’s webpage and it contain the provision of putting account number and the password then open the pages that contains all the options what the clients can do from the webpage. One of the multinational banks in Bangladesh named HSBC is launching a product like Hexagon. Hexagon is such a program, which accepted command through internet to the bank by the corporate and individual customers. Pay & Cash Management: This is called PCM banking system also. Suppose those banks who are located only capital city and others one or two cities then how can they manage the payment towards their customers whose who are far away from the bank place? They can do it through PCM system. The banks have arranged contract with local banks that called third party banks that carry forward the instruction and payments toward the first banks clients by getting certain commissions. NFCD: NFCD means Non-Resident Foreign Currency Account, which only can open Non-resident foreign Bangladeshi. Those who live in foreign country, come to the Bangladesh, and show the work permit, passport, and citizenship of this country, then only bank will open a NFCD account that is called one-way account for them. They can deposit the money when they will come to the Bangladesh and they can send money as a remittance in their NFCD accounts. Nevertheless, they can withdraw their money from their account through Global Access ATM card. This product introduced by HSBC and standard chartered bank RFCD: RFCD means Resident Foreign Currency Account that can open Resident Bangladeshi only. Those who live in Bangladesh and go outside frequently, by show ing their passport, they can open a RFCD account which is called one-way account for them. They deposit the money when they come back to the Bangladesh and they can send money as a remittance in their RFCD accounts. However, they can withdraw their money from their account through Global Access ATM card. They also can charge ATM in the local ATM machine but they instruct the machine in dollar/pound/euro format and they will get the local currency form from the machine by converting the amount as per bank rate on that day. Corporate Employee Privilege Scheme (CEPS): some corporate client can open their employees’ personal account to the banks where they can deal also corporate banking. The company can disburse their salary from their master account to the employees’ personal account on the mentioned date provided by the corporate business organizations. In this scheme the employee of the corporate client is benefited by getting consumer credit loan, force savings scheme, maintaining a savings account without any charge, they can avail the overdraft facility etc. B. Customers view point on ATM, credit card, and phone banking. In Bangladesh, people are not very much interacted with the technology. That is why Banks have to give tremendous effort to make sales of three mentioned products and after selling the products, people have so many queries, objections about it. Here the researchers have done an extensive fieldwork on ATM, credit card and phone banking clients. The researchers include 160 respondents, which may not too much but in the context of usage rate of these three products, it is still a very good figure to evaluate three products in the customer viewpoints. Table 1, 2 & 3 showing that every product has some advantage and disadvantage as well. Table 1 shows that advantage of ATM card is, it is very Convenient, Easy to Use, 24-hrs Banking Facility, Satisfactory Service, Electronic Transfer Facility, Multiple Use Facility, No need to await banking schedule, Advance Technology, Very effective for modern life, Happy with ATM charges, Satisfy with denomination of withdrawal money and It Makes life faster. These sorts of advantage give the people maintain a faster and modern life. Again, this ATM card has some disadvantage also which is in the table and calculates percentage, which indicates how many people dissatisfy with the product performance activity.

ATM CARD percentage

Out of 10

percentage

Out of 20

percentage

Others

Out of 10

Convenient Easy to Use 24-hrs Banking Facility Satisfactory Service Electronic Transfer Facility Multiple Use Facility No need to await banking schedule Advance Technology Very effective for modern life Happy with ATM charges Satisfy with denomination of withdrawal money It Makes life faster Others

Professional

percentage

Advantage

Businessman

Out of 25

Service Holder

20 8 15 15 3 10 12

80% 32% 60% 60% 12% 40% 48%

8 9 9 7 10 6 2

80% 90% 90% 70% 100% 60% 20%

7 6 7 5 2 7 5

70% 60% 70% 50% 20% 70% 50%

15 16 18 12 8 13 15

75% 80% 90% 60% 40% 65% 75%

18 20 15 7

72% 80% 60% 28%

2 8 4 3

20% 80% 40% 30%

5 8 4 7

50% 80% 40% 70%

10 18 2 2

50% 90% 10% 10%

11 2

44% 8%

6 5

60% 50%

10 5

100% 50%

15 11

75% 55%

Disadvantage Inconvenient Location Difficult to use Sophisticated Out of order Not fulfill the Necessity No chance to transfer money to the others bank Dissatisfaction with ATM Charges Dissatisfy with denomination of withdrawal money It Makes a man lazy Others

12 2 7 5 4 22 10 18 14 3

48% 8% 28% 20% 16% 88% 40% 72% 56% 12%

6 1 3 2 1 9 6 7 4 1

60% 10% 30% 20% 10% 90% 60% 70% 40% 10%

6 4 4 3 2 8 5 3 0 0

60% 40% 40% 30% 20% 80% 50% 30% 0% 0%

12 4 7 6 3 20 15 17 5 2

60% 20% 35% 30% 15% 100% 75% 85% 25% 10%

[Source: Field Survey] * Others means Mariner, Housewife and Students Table1: Advantage and Disadvantage of ATM

90% 60% 80% 65% 55% 15% 15% 25% 100% 15% 70% 25% 10% 10%

Out of 10

percentage

Out of 10

18 12 16 13 11 3 3 5 20 3 14 5 2 1

6 2 5 1 1 1 1 5 6 0 7 2 1 1

percentage

60% 20% 88% 24% 48% 20% 24% 40% 96% 16% 28% 36% 12% 16%

Others Out of 20

15 5 22 6 12 5 6 10 24 4 7 9 3 4

Professional percentage

Convenient Easy to Use Cash credit facility Cash withdraw facility Satisfactory Service Multiple Use Facility No need for banking schedule Advance Technology Very effective for modern life Happy with Credit card charges It Makes life faster Happy with billing systems Happy with Interest rate Others

Out of 25

Advantage

percentage

CREDIT CARD Service Holder Businessman

60% 20% 50% 10% 10% 10% 10% 50% 60% 0% 70% 20% 10% 10%

14 4 16 8 6 7 3 9 17 5 18 8 5 2

70% 20% 80% 40% 30% 35% 15% 45% 85% 25% 90% 40% 25% 10%

Disadvantage Inconvenient Difficult to use Sophisticated Not fulfill the Necessity No chance to transfer money to the others bank Dissatisfaction with Credit card Charges It Makes a man lazy Dissatisfaction about interest rate Dissatisfaction with annual charges Few are accepted credit card Not applicable in everywhere Dissatisfaction about service charges Dissatisfaction with Billing Others

9 20 12 10 25 20 15 22 24 25 25 20 20 4

36% 80% 48% 40% 100% 80% 60% 88% 96% 100% 100% 80% 80% 16%

2 7 7 8 19 13 6 17 17 20 19 18 11 3

10% 35% 35% 40% 95% 65% 30% 85% 85% 100% 95% 90% 55% 15%

4 7 5 5 6 6 7 7 7 9 10 6 1 1

40% 70% 50% 50% 60% 60% 70% 70% 70% 90% 100% 60% 10% 10%

6 14 11 12 13 4 5 15 12 19 20 14 14 2

30% 70% 55% 60% 65% 40% 25% 75% 60% 95% 100% 70% 70% 10%

[Source: Field Survey] * Others means Mariner, Housewife and Students Table2: Advantage and Disadvantage of Credit Card

4 3 4 4 2 2 3 2 3 4

80% 60% 80% 80% 40% 40% 60% 40% 60% 80%

Disadvantage Inconvenient Difficult to Operate Sophisticated Not fulfill the Necessity No chance to transfer money to the others bank Hunting line is too busy Only Few Bank have phone banking Not applicable in everywhere Dissatisfaction about service

2 3 3 2 5 5 5 5 1

40% 60% 60% 40% 100% 100% 100% 100% 20%

1 2 2 1 4 5 5 5 2

20% 40% 40% 20% 80% 100% 100% 100% 40%

percentage

percentage

60% 40% 40% 60% 40% 40% 60% 60% 80% 100%

Out of 5

Out of 5

3 2 2 3 2 2 3 3 4 5

Others

percentage

percentage

Convenient Easy to Operate Facility to Transfer the Money to other account Standing Instruction Satisfactory Service Multiple Use Facility 24-hrs banking facility Advance Technology Very effective for modern life It cost nothing

Professional Out of 5

Advantage

Out of 5

PHONE BANKIN G Service Holder Businessman

2 1 2 2 3 3 4 4 5 5

40% 20% 20% 40% 60% 60% 80% 80% 100% 100%

4 4 3 3 2 2 4 5 4 5

80% 80% 60% 60% 40% 40% 80% 100% 80% 100%

60% 60% 80% 60% 100% 100% 100% 100% 60%

1 1 4 2 3 5 5 5 2

3 3 4 3 5 5 5 5 3

20% 20% 80% 40% 60% 100% 100% 100% 40%

[Source: Field Survey] * Others means Mariner, Housewife and Students Table3: Advantage and Disadvantage of Phone Banking Table 2 & 3 also indicating the realistic scenario of credit card and phone banking. Here the credit card is very hot product in Bangladesh due to it facilitate loans and cash withdrawal facility though the banks are charging more than 30 % interest on the usage amount by the respondents. The researcher also survey regarding why customers often use ATM. In addition, the output of the survey shows that cash withdrawal and balance query is the top most preference when people are using their ATM in the ATM machines. Another survey comprise that out of three hot banking product most of them are availing ATM cards, a mentionable number of people are holding credit cards and very few

Fig2 :Usage trends of ATM, Credit Card and Phone Banking by the sample respondents

Fig1: Using ATM by Sample respondents

Cash Deposit

Respon 100 dents 50

Fund Transfer

0 Usage Pattern

Balance Inquiry others

Respondents

Cash Withdrawal

150

Phone Banking(25) Credit Card(40)

0

20

40

60

ATM(50)

Category

of them are using phone banking product or facility though it cost nothing. There is another survey comprised on the costing to hold these products. The most costly to hold a credit card, ATM respectively, and phone banking has no cost. Concluding remarks: Modern Management & Marketing concept in the banking services is new for Bangladeshi people. Most of our bank has not any marketing or sales forces to execute the raw and cold business for their own organization and people are not conscious about the advantages of the technology. Some multinational banks are already introduced their marketing activities over their targeted customer which is found very effective. The multinationals are coming up towards people with variety of highly technical products, which can meet the people’s problem and can able to modernize their lifestyle. Public, Local commercial bank has to come out with this sorts of products so that people will keep faith on these products. References 1. “Banking Juge Juge” by M A Mannan, 1996 2. Bangladesh Company Act 1913 3. Hood, J.M. (1979), “Demographics of ATMs”, Banker’s Magazine, November -December, pp. 6871. 4. India Company Act 5. Kotler, Philip & Armstrong Gary (1997), Principles of Marketing, New Delhi: Prentice-hall of India, seventh edition, p.117 6. Murphy, N.B. (1983), “Determinants of AT M activity: the impact of card base, location, time in place and system”, Journal of Bank Research, autumn, pp. 231-3. 7. Ostlund, L.E. (1974), “Perceived innovation attributes as predictors of innovativeness”, Journal of Consumer Research, Vol. 1 No. 2, pp. 23-9. 8. Rugimbana, R.O. and Iversen, P. (1994), “Perceived attributes of innovations”, International Journal of Bank Marketing, Vol. 12, No. 2, pp. 30-5. 9. Stevens, R.E., Carter, P.S., Martin, R.T., and Cogshell, D.(1986), “A comparative analysis of users and non-users of automatic teller machines”, Journal of Retail Banking, Vol. 8 Nos. 1 and 2, pp. 71-8. 10. Stevens, R.E., Carter, P.S., Martin, R.T. and Cogshell, D. (1987), “ATM non-adopters: how valuable are they?”, Banker’s Magazine, September -October, pp. 51-3. 11. Taylor, J.W. (1977), “A striking characteristic of innovators”, Journal of Marketing Research, Vol. 14, February, pp. 104-7. 12. www.hsbc.co.bd, www.nccbl.com , www.primebank.com, www.standardchartered.com, 13. www.Bangladeshbank.org 14. Zeithaml, V.A. and Gilly, M.C. (1987), “Characteristics affecting the acceptance of retailing technologies: a comparison of elderly and non-elderly consumers”, Journal of Retailing, Vol. 63 No. 1, pp. 49-68.