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Advantage & disadvantage of online banking

Published on 1st Sep, Edition 35, 2014

 

Worldwide, governments transfer trillions in cash for salaries, pensions and welfare payments to persons, Pakistan is no exemption. Automating government to Person (G2P) presents tremendous merits. Firstly, the government can save great sums of amount. Secondly, recipients will have advantage from rapid payments with few leakages in the system. Most significantly, a growing body of evidence explains that with suitable delivery replicas, (G2P) payments recipients can be simply brought into the sphere of financial services, which should not to be missed.

Finally, individuals not getting G2P payments, but within the geographic network may taking advantage from spillover effects.

Realizing the scope of G2P, players in the country are already conducting experiments in many forms of branchless banking. In Pakistan during January to March quarter of FY2014, PRISM (Pakistan real-time interbank settlement mechanism) the large value payment system processed 156,159 payments value of over Rs38.8 trillion. This explained a rise of 10.2 percent both in value and volume respectively compared with that in the previous quarter. During January to March quarter of FY2014, 393 ATMs have been further added in the network bringing the sum of 8,077 ATMs.

RETAIL PAYMENT SYSTEMS – TRANSACTIONS
CHANNELS Q3 FY13 Q2 FY14 Q3 FY14
NO. AMOUNT NO. AMOUNT NO. AMOUNT
Paper based instruments 86,768 25,593,282 93,046 28,122,649 86,594 27,517,021
ATM 51,607 474,890 61,671 635,370 65,301 674,501
Points of Sale 5,365 27,006 5,708 29,211 6,150 32,258
Real Time online Banking 22,853 7,227,855 24,540 7,480,974 24,489 7,428,764
Mobile Phone Banking 1,117 7,349 1,470 15,223 1,678 17,240
Call Centre(IVR) Banking 158 1,955 167 2,290 165 2,385
Internet Banking 2,426 126,304 3,926 161,332 4,542 172,677
Total:- 170,294 33,458,64 190,52 36,447,04 188,91 35,844,846
Note: (Number in Thousands and Amount in Millions)

Total ATMs transactions constituted a volume share of approximately 64 percent and value share of 8.0 percent in overall e-banking transactions. Moreover, total transactions carried by ATMs explained a rise of 5.9 percent in volume and 6.2 percent in value of transactions compared with that in the last quarter and a rise of 26.5 percent in volume and 42.0 percent in value of transactions as against the same quarter last year. In terms of composition of ATMs transactions during the quarter, the share of cash withdrawals was 96.0 percent in volume and 81.2 percent in value of transactions, the share of IBFT (interbank funds transfer) was 3.7 percent in volume and 18.7 percent in value of transactions and residual share of transactions pertain to cash deposits, utility bills payment and payment instruments deposits. Furthermore, the number of online branches touched to 10,601 which accounts for approximately 95 percent of the total bank branches in Pakistan. Approximately 24.5 million transactions amounting to Rs7.4 trillion were executed by this medium during the third quarter of FY2014. The number of plastic cards has reached to 24.3 million indicating a rise of 8.6 percent as against to the previous quarter. However, the number of credit cards explained a fall of 0.2 percent compared with that in the last quarter. As on 31st March 2014, there are approximately 18.3 POS (point of sale) machines for every 100,000 people in Pakistan. Number of Mobile Phone Banking transactions has increased by 14.1 percent and the value transacted rose by 13.3 percent as against to the previous quarter. Presently, there are approximately 1.5 million recorded users of mobile phone banking in Pakistan.

 

Demerits

For online banking service the first thing is to make or signup the account which may can be a tough as the banks officials may need various things like CNIC, photos, identity and verification so it can a time-taking procedure. The other thing while starting online bank account is that if clients want to begin mutual account in that case one of them has to give attorney. Further big demerits of online banking is that clients will have to learn all the significant parts of using account on website of concerned bank including software used on website and the websites of banks can be up-gradated or altered so for non-Internet clients can face problems.

It has been also mentioned that some because of non-availability of Internet or any other technological problems can reason to stop the websites, so clients cannot ran their account in the absence of Internet or without appropriate operational website. In online banking money accounts can be unsaved there are various possibilities that personal data including pin codes are being theft with cyber-crimes so if it happens clients may lose all money. Whenever clients are feeling challenges regarding their bank account they visit the concerned bank branch and meet professional staff which they take some time and all issues are being resolved but on the other hand in online banking account system clients may not have these facilities so clients may face various difficulties. Surprisingly, last time in Karachi, some robbers attempt to run away with the pulled out ATM machine of a private commercial bank.

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