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Analysis of E-Banking. A case analysis on a bank.
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WELCOME TO THE PRESENTATION
“APPLICATION OF E-BANKING IN BANGLADESH”
A CASE ANALYSIS OF ISLAMI BANK BANGLADESH LIMITED
GROUP MEMBERS
1)Mohammad Wahidul Haque 111-11-19062)Abul kalam Azad 111-11-17703)Faruqul Islam 111-11-17794)Sohag Parvez 111-11-17725)Monjur Morshed Rahat 111-11-17746) G.M. Reyad Hossain 111-11-1866
BANK OVERVIEWBANK OVERVIEW
PORTER’S FIVE FORCES MODEL
Porter’s five forces model helps in accessing where the power lies in a business situation.
Porters Model is considered an important part of planning tool set.
THREAT OF NEW COMPETITION
The threat of new entry or competition of Islami Bank Bangladesh Limited is high because :
The starting capital requirement is less Few economies of scale are in place The switching cost or sunk cost is
comparatively low than the other banks so customer can easily switch
The key technology is protected but is hard to acquire
Brand Equity is satisfactory
THREAT OF SUBSTITUTE PRODUCTS OR SERVICES
Here the threat of IBBL on substitute products or services is also high due to the below factors:
There are many substitute products available Customer can easily find the product or service
that the competitors are offering at the same or less price
Substandard product is available Ease of substitution. Information-based products
are more prone to substitution, as online product can easily replace material product.
BARGAINING POWER OF SUPPLIERS
IBBL’s suppliers are more powerful because: Suppliers are concentrated and well
organized a few substitutes available to supplies Their product is most effective or unique Switching cost, from one suppliers to
another, is high IBBL is an important customer to Supplier Strength of distribution channel
BARGAINING POWER OF CUSTOMERS (BUYERS)
IBBL’s Buyer has low bargaining power due to below issues:
• Offering differentiated product• Buyer purchases in bulk quantities• Product is differentiated• Shopping cost is medium• Buyers are price sensitive• Buyer information availability• Differential advantage (uniqueness) of
industry products
INTENSITY OF COMPETITIVE RIVALRY
IBBL’s Industry rivalry is high because There are number of small or equal
competitors and less when there’s a clear market leader.
Customers have low switching costs Industry is growing Exit barriers are high and rivals stay and
compete Fixed cost are high resulting huge production
and reduction in prices Level of advertising expense Powerful competitive strategy
BANK ANALYSISBANK ANALYSIS
IBBL was established on the 13th March 1983 as the first Islamic Bank in the South East Asia.
Mission To establish a welfare oriented banking
system To ensure equity & justice in the field of
economics To encourage socio-economic uplift To provide financial assistance in rural areas To achieve balanced growth & equitable
development through diversified investment
VISION
To establish and maintain the modern banking techniques
To ensure soundness and development of the financial system based on Islamic principles
To become the strong and efficient organization with highly motivated professional
To work for the benefit of people To encourage savings in the form of direct
investment To encourage investment particularly in
projects which are more likely to lead to higher employment.
CORE VALUES
Trust in Almighty Allah Strict observance of Islamic Shari’ah Highest standard of Honesty, Integrity &
Morale Welfare Banking Equity and Justice Environmental Consciousness Personalized Service Adoption of Changed Technology Proper Delegation, Transparency &
Accountability
PRODUCT
Al-Wadeah Current Account (AWCA) Mudaraba Savings Account (MSA) Mudaraba Term Deposit Account (MTDR) Mudaraba Special Notice Account (MSNA) Mudaraba Hajj Savings Account (MHSA) Mudaraba Special Savings (Pension) Account (MSSA) Mudaraba Savings Bond (MSB) Mudaraba Monthly Profit Deposit Account (MMPDA) Mudaraba Muhor Savings Account (MMSA) Mudaraba Waqf Cash Deposit Account (MWCDA) Mudaraba NRB Savings Bond (MNSB) Account Mudaraba Foreign Currency Deposit Account (MFCD) Students Mudaraba Savings Account (SMSA) Mudaraba Farmers Savings Account (MFSA)
SERVICE
NRB (Non Resident Bangladeshi) Entrepreneurs Services
Remittance Card Investment Scheme for Foreign Expatriate Mudaraba NRB Saving Bond SME Service1. Manufacturing2. Trading3. Services Foreign Exchange Serviceo Importo Exporto Remittance
CORPORATE INFORMATION
Authorized Capital TK 20,000.00 Million
Paid-up Capital TK 10007.71 Million
Deposits TK 341,361.00 Million
Investment ( including investment in shares)
TK 341,031.00 Million
FOREIGN EXCHANGE BUSINESS
Import TK 301,207.00 Million
Export TK 178,244.00 Million
Remittance TK 236,607.00 Million
SWOT ANALYSISSWOT ANALYSIS
SWOT analysis (alternately SWOT Matrix) is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture.
Strengths: characteristics of the business, or project team that give it an advantage over others
Weaknesses: are characteristics that place the team at a disadvantage relative to others
Opportunities: external chances to improve performance (e.g. make greater profits) in the environment
Threats: external elements in the environment that could cause trouble for the business or project
STRENGTHS
interest-free banking system according to Islamic Shariah
income of the Bank is shared with the depositors welfare oriented banking system equity and justice in the field of all economic
activities. financial services to the poor, helpless human resource development achieve balanced growth ICAB awarded IBBL for presenting best Annual
Report IBBL is enlisted in the TOP 1000 banks in the
world
WEAKNESSES
lack of expert employees insufficient advertisement emphasize only developed sectors feeble modern technology deficiency of expertise number of ATM booth
OPPORTUNITIES
Huge chance of depositing & investment due to islamic shariah based operation
Development of the financial system based on Islamic Principles
Innovative as well as modern customer service Encourage savings in the form of direct investment Investing developed sectors Transactions with NRB (Non Resident
Bangladeshi) Lending SME sectors Enriching Foreign Exchange Business Providing Locker service Distribution of offshore services
THREATS
Establishment of Competitors Advancement of Modern Technology The switching cost or sunk cost is
comparatively low than the other banks so customer can easily switch
There are many substitute products available Different kinds of facilities from other banks Improved advertisement from others Online Banking is satisfactory
RATIO ANALYSIS
&
TREND ANALYSIS
RATIO ANALYSIS
&
TREND ANALYSIS
LIQUIDITY RATIO: Liquidity Ratio 2007-08 2008-09 2009-10 2010-11 2011-12
Liquid Asset
Current Liabilities
47743111949
22167444018= 2.15
51235982040
21369827458= 2.40
55369875318
21584679280= 2.57
62035742189
22654789123= 2.73
78951258456
25369741852= 3.11
2007-08 2008-09 2009-10 2010-11 2011-120
0.5
1
1.5
2
2.5
3
3.5
Liquidity Ratio
Liquidity Ratio
DECISION
The ratio indicates that Islami Bank Bangladesh Limited can cover only 3.11(Current year) percent of their existing debt obligations with their current liquid assets. Clearly, Islami Bank Bangladesh Limited plans to meet the debt obligations from their income, but the ratio suggests that their liquid funds do not provide a large production.
CURRENT RATIO
Current Ratio 2007-08 2008-09 2009-10 2010-11 2011-12
Current Asset
Current Liabilities
48756111949
22167444018= 2.20
51935982040
21369827458= 2.43
55969875318
21584679280= 2.59
72035742189
22654789123= 3.18
88951258456
25369741852= 3.51
2007-08 2008-09 2009-10 2010-11 2011-120
0.5
1
1.5
2
2.5
3
3.5
4
Current Ratio
Current Ratio
DECISION
The higher the current ratio, the more liquid the firm is considered to be. The more predictable a firm’s cash flows, the lower acceptable current ratio. And the lower the current ratio, the less liquid the firm is considered to be.
QUICK RATIOQuick Ratio 2007-08 2008-09 2009-10 2010-11 2011-12Current assets – Inventory Current Liabilities
19895413697
22167444018= 0.90
31835982040
21369827458= 1.49
35969875316
21584679280= 1.66
42035542189
22654789123= 1.86
63951258456
25369741852= 2.52
2007-08 2008-09 2009-10 2010-11 2011-120
0.5
1
1.5
2
2.5
3
Quick Ratio
Quick Ratio
DECISION
A quick ratio of 1.0 or greater is occasionally recommended, but as with the current ratio, what value is acceptable depends largely on the firm. But in the year of 2007-08 the quick ratio is less than 1.00. All depend on the firm though the quick ratio is less than 1.00.
AVERAGE PAYMENT PERIODAve. pay. Per 2007-08 2008-09 2009-10 2010-11 2011-12Accounts Payable Annual Purchases 365
2216744401
1464938454 365= 552 days
2640868554
877960724 365= 550 days
6561288485
2207078082 365= 511 days
6985275312
2296542587 365 = 498 days
7025841982
2254962587 365= 444 days
2007-08 2008-09 2009-10 2010-11 2011-120
1
2
3
4
5
6
Average payment period
Average payment period
DECISION
As the average payment period indicates that the time needed to pay accounts payable. Here it is clearly seen that the Islami Bank Bangladesh Limited needs less time relating to the previous year to pay accounts payable.
DEBT RATIODebt Ratio 2007-08 2008-09 2009-10 2010-11 2011-12
Total Liabilities
Total Assets
48756111949
321674440180= 0.15 X 100= 15%
51935982040
413698274587= 0.14 X100= 14%
55969875318
455846792802= 0.145 X 100= 14.5%
30709186251
530586118271= 0.13 X 100= 13%
88951258456
653697418525= 0.11 X 100= 11%
2007-08 2008-09 2009-10 2010-11 2011-120
2
4
6
8
10
12
14
16
Debt ratio
Debt ratio
DECISION
The higher this ratio, the greater the firm’s degree of indebtedness and the more financial leverage it has. Again, the lower ratio refers to the fewer degree of indebtedness and the less financial leverage it has.
DEBT EQUITY RATIO
Debt Equity Ratio
2007-08 2008-09 2009-10 2010-11 2011-12
Total Liability
Shareholders Equity
48756111949
121674440182= 0.27 X 100= 27%
51935982040
213698274587= 0.24 X 100= 24 %
55969875318
315846792808= 0.23 X 100= 23 %
72035742189
326547891237= 0.20 X 100= 20 %
88951258456
453697418529= 0.19 X 100= 19 %
2007-08
2008-09
2009-10
2010-11
2011-12
0
5
10
15
20
25
30
Debt Equity Ratio
Debt Equity Ratio
TIME INTEREST EARNED RATIO T.I.E.R 2007-08 2008-09 2009-10 2010-11 2011-12
EBIT
Interest
8489792032
258951753= 4.71
8895478512
256987412= 4.58
9008547892
265879215= 4.78
9215248895
278954621= 4.86
9625846987
289563487= 4.94
2007-08 2008-09 2009-10 2010-11 2011-124.4
4.5
4.6
4.7
4.8
4.9
5
T.I.E.R.
T.I.E.R.
DECISION
The higher the value, the better able the firm is to fulfill its interest obligations. The lower the value, the less able the firm is to fulfill its interest obligations.
RETURN ON ASSET:
Return on Asset 2007-08 2008-09 2009-10 2010-11 2011-12Earnings available for common stock holders
Total Assets
47743111949
22167444018= 25%
51235982040
21369827458= 26.50%
55369875318
21584679280= 27%
62035742189
22654789123= 28%
78951258456
25369741852= 30.20%
2007-08 2008-09 2009-10 2010-11 2011-120
5
10
15
20
25
30
35
Return on Asset
Return on Asset
DECISION
The higher the firm’s return on total assets, the better effectiveness of management in generating profits with its available assets. The lower the firm’s return on total assets, the less effectiveness of management in generating profits with its available assets.
RETURN ON EQUITY
Return on Equity
2007-08 2008-09 2009-10 2010-11 2011-12
Earnings available for common stock holders
Common stock equity
47743111949
332167444018= 28%
51235982040
51369827458= 29.50%
55369875318
641584679280= 30%
62035742189
652654789123= 32%
78951258456
685369741852= 33.10%
2007-08 2008-09 2009-10 2010-11 2011-1225
26
27
28
29
30
31
32
33
34
Return on Equity
Return on Equity
DECISION
The higher this return, the better off are the owners in terms of earning on the common stockholders investment in the firm. The lower this return, the less better off are the owners.
PRICE EARNINGS RATIOPrice Earnings Ratio
2007-08 2008-09 2009-10 2010-11 2011-12
Market price per share of common stock Earnings per share
298.72
12.03= 9.56
330.45
31.10= 8.27
410.27
45.91= 8.94
620.36
60.21= 10.30
702.18
78.12= 8.99
2007-08 2008-09 2009-10 2010-11 2011-120
2
4
6
8
10
12
Price Earnings Ratio
Price Earnings Ratio
DECISION
The higher the price earnings ratio, the greater the investor confidence. The lower the price earnings ratio, the less the investor confidence.
DIVIDEND PAYOUT RATIO
Dividend Payout ratio
2007-08 2008-09 2009-10 2010-11 2011-12
Yearly Dividend per share
No. of share
282889600
5090300= 55.57
3012569874
10369524= 60.36
3269528445
15698456= 62.48
4025698458
19568546= 65.07
4802365287
20136952= 67.25
2007-08 2008-09 2009-10 2010-11 2011-120
10
20
30
40
50
60
70
80
Dividend Payout Ratio
Dividend Payout Ratio
DECISION
The higher the ratio, the more chance to gain profit. And the lower the ratio, the less chance to gain the profit.
EARNINGS PER SHARE
EPS 2007-08 2008-09 2009-10 2010-11 2011-12
Earnings after TaxNo.of share
1025497621
5090300= 12.03
2565489521
10369524= 31.10
3698527458
15698456= 45.91
4203574218
20568546= 60.21
5895125845
29136952= 78.12
2007-08 2008-09 2009-10 2010-11 2011-120
10
20
30
40
50
60
70
80
EPS
EPS
DECISION
The higher the EPS, the greater chance of profit of the firm. Whereas the lower EPS indicates the lower chance of profit of the firm.
OTHER TRENDS
2007 2008 2009 2010 20110
50000
100000
150000
200000
250000
300000
350000
166325
202115
244292
291935310225
Trend of Deposit
Trend of Deposit
Amount in MillionTaka
2007 2008 2009 2010 20110
50000
100000
150000
200000
250000
300000
144921
180054
214616
263225
297113
Trend of Investment
Trend of Investment
Sector wise Investment
IndustrialCommercialReal EstateAgricultureTransportSMEOthers
FOREIGN EXCHANGE BUSINESS
2007 2008 2009 2010 20110
50000
100000
150000
200000
250000
300000
96870
137086
168329161230
246281
53819
8414393962
106424
148421
51133
66690
140404
194716
214629
ImportExportRemittance
ELECTRONIC BANKINGELECTRONIC BANKING
E-BANKING
Electronic banking refers to the bank account maintained by computer and telecommunications links rather than physical transfer of cash, cheques or other negotiable instruments.
In other words, the banking customer processes transactions directly via computer, without dealing with entity
Standard Chartered Bank brought first E-banking service in Bangladesh.
TYPES OF E-BANKING
ATM (Automated Teller Machine) Using an ATM, customers can access their
bank accounts in order to make cash withdrawals, debit card cash advances, and check their account balances as well as purchase pre-paid mobile phone credit.
Authentication is provided by the customer entering a personal identification number (PIN)
ELECTRONIC FUNDS TRANSFER (EFT)
the electronic exchange transfer of money from one account to
another either within a single financial institution or
across multiple institutions, through computer-based systems.
DEBIT CARD
make purchases Make payments occur at a store or business, online, or by
phone.
CREDIT CARDS
a customer can avail various facilities or buy products/services without making immediate payment and that could be made at later stage of time.
PERSONAL COMPUTER BANKING
To handle many banking transactions via your personal computer
To view your account balance request transfers between accounts, and pay bills electronically.
MOBILE BANKING
Mobile banking provides customer to access their account on mobile phone screen.
Routine banking transactions can be performed by just punching a few buttons on the mobile.
SMS BANKING
SMS banking uses short text messages sent through the client’s mobile phone
A client can automatically receive information about his account balance
ELECTRONIC BANKING
OF
ISLAMI BANK BANGLADESH LIMITED
ELECTRONIC BANKING
OF
ISLAMI BANK BANGLADESH LIMITED
IBBL has introduced its Online Banking service since 2006
Now more than 60,000 of existing ATM card holders can use IBBL’s own 48 ATMs & 157 ATMs of shared ATM network.
About 5000 transactions with withdrawal of more than Tk. 4 crores are now done per day.
THE ATM PROJECT
Since 2001, IBBL started providing ATM service to its customers from 55 branches through a consortium of 9 financial organizations using a 3rd party ATM service provider.
SERVICES Cash Withdraw Fund Transfer Mini Account Statement Balance InquiryTransaction Limit For Cash Withdrawal maximum amount is Tk. 50,000
in a calendar date.Charges Tk.300 Yearly fees is applicable.
SMS BANKING
Through SMS push-pull service, clients can see their latest balance information and last three transactions in their mobiles from anywhere in the world.
At present more than one lac clients have been registered in SMS banking and on average 6500 requests are being received per day.
Services Multiple Account Registration International Push- Pull Facility Account Balance (BAL ) Mini Account Statement (STM) Account Information (ACI)
INTERNET BANKING
Through iBanking, Foreign Remittance Houses & valued clients can check account details at IBBL’s web portal. So far, nearly 20000 clients have registered for taking the internet banking services.
Services Transfer funds (iTransfer) between IBBL
accounts Purchase airtime / Recharge account
( iRecharge) from all mobile operators in Bangladesh, except teletalk.
Wimax Recharge
OTHER TYPES OF E-BANKING
Shariah based Credit card Remittance Card VISA facility SWIFT service(Society for Worldwide Inter-
Bank Financial Telecommunication)
COMPARISONCOMPARISON
Factors of E-Banking IBBL BRAC Bank DBBL ATM DEBIT CARD X SHARIAH BASED CREDIT CARD
x x
CREDIT CARD x
REMITTANCE CARD VISA SMS BANKING INTERNET BANKING MOBILE BANKING x x
MIS x x
SWIFT SERVICE x x
MAIL BANKING
PC BANKING
EFT SYSTEM
WAP SERVICE
RECOMMENDATIONRECOMMENDATION
After all IBBL needs some steps to be taken to improve the E-Banking which are as follows-
To expand the number of ATM booths To place ATM booths in good areas To update the ATM machines To update the software of ATM To provide security to the ATM user like cc camera
in ATM booth To develop SMS Banking To reduce I-Banking charge To give more facilities on remittance card user
specially foreigners To improve SWIFT service To start Mobile Banking as early as possible To construct a developed MIS
To establish core banking system like BACH,BEFTN,MIS
To facilitate PC Banking To improve the WAP service To improve the web page adding more features To store the E-banking transactions in secured
place To accomplish the E-banking transactions quickly To establish electronic integrated banking system To equip more IT expert employees for the
development of E-Banking To implement the core objectives for the
development of E-banking
THANK YOU ALL !!!