banking is no longer confined to the four walls of a branch. Many
countries are far ahead of the facilities being available in Pakistan.
The initiative in e-Banking in the country was taken a bit late, but now
focused efforts are being made to catch up with rest of the world. In
this regard, Muslim Commercial Bank (MCB) recently organized 'Pakistan
e-Banking Conference'. It was co-sponsored by ABN-AMRO Bank, IBM,
Teradata and local newspaper. Dr. Ishrat Husain, Governor State Bank of
Pakistan was the chief guest.
The level of low banking, a few years back, was
confined to the four walls of branch. With the entry of private banks,
having limited number of branches, investment in technology was chosen,
as alternative, to overcome this deficiency. The advent and common use
of Internet, leading to e-commerce, forced the banks globally to
incorporate e-banking. Pakistani banks are still far behind their global
counter parts. One such example is complete lack of merchant accounts in
However, lately a task force was established to study
and implement formation of Electronic Clearing House (ECH).
Simultaneously, the local banks also went for on-line banking, though
still not a norm. Another step forward was installation of ATMs by the
banks. While some banks have their own ATMs, some other banks started
using a dedicated network. In this system an ATM card holder of a
particular bank could use teller machines installed by all the sponsors
of this network. The system is working to a satisfactory level.
Though efforts are being made to increase the number
of on-line branches, it is still a capital intensive proposal. It is
getting popular in urban areas, but has not become common in rural
areas, mainly due to low literacy level in the country. However, some
analysts believe that with the passage of time, confidence in the system
and increasing use, traffic to branches in urban areas will go down
A factor which is the key issue in e-banking is low
penetration level of computers in Pakistan. The other factors, not
allowing the people who have computers and Internet facility, was lack
of services being offered by the banks, legal framework and concerns
about the security. A landmark step in this direction is the
promulgation of the Electronic Transactions Ordinance 2002. This
Ordinance provides legal recognition to digital signatures and
documentation reducing the risks associated with the use of electronic
medium of business.
One factor prohibiting use of the newly offered
services is, its high cost. The banking sector terms this nominal,
keeping in view the level of convenience. Saying this, they still
believe that cost can go down further with the increased use of these
facilities. It is also believed that while the use of these facilities
is low due to apprehensions about security, clients take refuge behind
A factor slowing down the process in this area is
capital intensive nature of these operations. The investment in
technology by the commercial banks is affecting the payout to
shareholders as well as the depositors. The banking sector experts term
this only a brief phase.
The global market for electronic transactions is
growing at a phenomenal rate, expected to aggregate to trillions of
dollars by the year 2004. Pakistan should not sit back and ignore this
global phenomenon. To actively participate in the global economy,
Pakistan must develop its e-commerce infrastructure. This comprise of
three ingredients: legal framework, security of transactions and
e-readiness of the banks.