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: shipul@bttb.net.bd , shipul1@hotmail.com
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 in-
house 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
Service Holder Businessman Professional Others

percentage

percentage

percentage

percentage
Out of 10
Out of 25

Out of 10

Out of 20
Advantage

Convenient 20 80% 8 80% 7 70% 15 75%

Easy to Use 8 32% 9 90% 6 60% 16 80%
24-hrs Banking Facility 15 60% 9 90% 7 70% 18 90%
Satisfactory Service 15 60% 7 70% 5 50% 12 60%
Electronic Transfer Facility 3 12% 10 100% 2 20% 8 40%
Multiple Use Facility 10 40% 6 60% 7 70% 13 65%
No need to await banking 12 48% 2 20% 5 50% 15 75%
schedule
Advance Technology 18 72% 2 20% 5 50% 10 50%
Very effective for modern life 20 80% 8 80% 8 80% 18 90%
Happy with ATM charges 15 60% 4 40% 4 40% 2 10%
Satisfy with denomination of 7 28% 3 30% 7 70% 2 10%
withdrawal money
It Makes life faster 11 44% 6 60% 10 100% 15 75%
Others 2 8% 5 50% 5 50% 11 55%

Disadvantage
Inconvenient Location 12 48% 6 60% 6 60% 12 60%
Difficult to use 2 8% 1 10% 4 40% 4 20%
Sophisticated 7 28% 3 30% 4 40% 7 35%
Out of order 5 20% 2 20% 3 30% 6 30%
Not fulfill the Necessity 4 16% 1 10% 2 20% 3 15%
No chance to transfer money to the others bank 22 88% 9 90% 8 80% 20 100%
Dissatisfaction with ATM Charges 10 40% 6 60% 5 50% 15 75%
Dissatisfy with denomination of withdrawal money 18 72% 7 70% 3 30% 17 85%
It Makes a man lazy 14 56% 4 40% 0 0% 5 25%
Others 3 12% 1 10% 0 0% 2 10%
[Source: Field Survey] * Others means Mariner, Housewife and Students
Table1: Advantage and Disadvantage of ATM
CREDIT CARD
Service Holder Businessman Professional
Others
Advantage
percentage

percentage

percentage

percentage
Out of 25

Out of 10

Out of 10

Out of 20

Convenient 15 60% 18 90% 6 60% 14 70%

Easy to Use 5 20% 12 60% 2 20% 4 20%
Cash credit facility 22 88% 16 80% 5 50% 16 80%
Cash withdraw facility 6 24% 13 65% 1 10% 8 40%
Satisfactory Service 12 48% 11 55% 1 10% 6 30%
Multiple Use Facility 5 20% 3 15% 1 10% 7 35%
No need for banking schedule 6 24% 3 15% 1 10% 3 15%
Advance Technology 10 40% 5 25% 5 50% 9 45%
Very effective for modern life 24 96% 20 100% 6 60% 17 85%
Happy with Credit card charges 4 16% 3 15% 0 0% 5 25%
It Makes life faster 7 28% 14 70% 7 70% 18 90%
Happy with billing systems 9 36% 5 25% 2 20% 8 40%
Happy with Interest rate 3 12% 2 10% 1 10% 5 25%
Others 4 16% 1 10% 1 10% 2 10%
Disadvantage
Inconvenient 9 36% 2 10% 4 40% 6 30%
Difficult to use 20 80% 7 35% 7 70% 14 70%
Sophisticated 12 48% 7 35% 5 50% 11 55%
Not fulfill the Necessity 10 40% 8 40% 5 50% 12 60%
No chance to transfer money to the others bank 25 100% 19 95% 6 60% 13 65%
Dissatisfaction with Credit card Charges 20 80% 13 65% 6 60% 4 40%
It Makes a man lazy 15 60% 6 30% 7 70% 5 25%
Dissatisfaction about interest rate 22 88% 17 85% 7 70% 15 75%
Dissatisfaction with annual charges 24 96% 17 85% 7 70% 12 60%
Few are accepted credit card 25 100% 20 100% 9 90% 19 95%
Not applicable in everywhere 25 100% 19 95% 10 100% 20 100%
Dissatisfaction about service charges 20 80% 18 90% 6 60% 14 70%
Dissatisfaction with Billing 20 80% 11 55% 1 10% 14 70%
Others 4 16% 3 15% 1 10% 2 10%
[Source: Field Survey] * Others means Mariner, Housewife and Students
Table2: Advantage and Disadvantage of Credit Card

PHONE BANKIN G
Service Holder Businessman Professional Others

percentage

percentage

percentage

percentage
Out of 5
Out of 5

Out of 5

Out of 5
Advantage

Convenient 3 60% 4 80% 2 40% 4 80%

Easy to Operate 2 40% 3 60% 1 20% 4 80%
Facility to Transfer the Money to other account 2 40% 4 80% 2 20% 3 60%
Standing Instruction 3 60% 4 80% 2 40% 3 60%
Satisfactory Service 2 40% 2 40% 3 60% 2 40%
Multiple Use Facility 2 40% 2 40% 3 60% 2 40%
24-hrs banking facility 3 60% 3 60% 4 80% 4 80%
Advance Technology 3 60% 2 40% 4 80% 5 100%
Very effective for modern life 4 80% 3 60% 5 100% 4 80%
It cost nothing 5 100% 4 80% 5 100% 5 100%

Disadvantage
Inconvenient 2 40% 1 20% 3 60% 1 20%
Difficult to Operate 3 60% 2 40% 3 60% 1 20%
Sophisticated 3 60% 2 40% 4 80% 4 80%
Not fulfill the Necessity 2 40% 1 20% 3 60% 2 40%
No chance to transfer money to the others bank 5 100% 4 80% 5 100% 3 60%
Hunting line is too busy 5 100% 5 100% 5 100% 5 100%
Only Few Bank have phone banking 5 100% 5 100% 5 100% 5 100%
Not applicable in everywhere 5 100% 5 100% 5 100% 5 100%
Dissatisfaction about service 1 20% 2 40% 3 60% 2 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
 Fig1: Using ATM by Sample Fig2 :Usage trends of ATM, Credit
respondents Card and Phone Banking by the
sample respondents
Cash
150 Withdrawal

Respondents
Cash
Phone
Respon 100 Deposit
Banking(25)
dents 50 Fund
Transfer Credit Card(40)
0
Balance
Usage Inquiry ATM(50)
0 20 40 60
Pattern others
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. 68-
71.
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.