Dec 10 - 16, 2007

The rapid development in computer and telecommunication technologies is transforming the way commercial banking in done. In fact technology is taking present branch banking into highly integrated next generation multi channel e-banking. The technology has enabled the institutions to offer their services 24/7, cross border and in any currency.

Banks in Pakistan started exploiting technology more than quarter of a century ago by installing mainframe computers using punch card technology. However, the revolution was ushered with the introduction of personal computers (PCs). With the innovation local area network (LAN), wide area network (WAN) and World Wide Web (WWW) offering a host of services became possible.

Banks in Pakistan also started offering their services through alternate delivery channels of e-banking such as Automated Teller Machines (ATM), Point of Sale (POS), Internet, Call Center, Interactive Voice Recognition (IVR), Mobile telephone, and Real Time Online Banking. The growth in e-banking witnessed in last 6 years both in terms of numbers and value is phenomenal.

Now almost all the banks offer ATM service, online banking facility, POS terminals, call center and internet based banking. The e-banking infrastructure has registered tremendous growth during the last five years in almost all the areas. Another exhibition if growing acceptability of e-banking products is growing use of plastic money. With the growing preference for plastic money, credit cards, debit and ATM cards also witnessing exceptional growth.

The retail transactions are gaining popularity among the users due to their security, easy accessibility and of-course the customized solutions offered to the users. This is also reflected in the significant increase in the retail transactions through e-banking.

The volume of such transactions now touches 10 million. Going by the e-banking channels, the ATMs transactions grew by much larger pace. The value of such transactions is also on rise. When compared with the other e-banking channels, the ATM transactions are about 50 percent of the total e-banking transactions.


The technology backbone mainly consists of computers and telephony. Over the years computers have experienced tremendous growth in processing speed, data storage capacity and performance of multitasks simultaneously. Taking the advantage of state-of-the-art technology commercial banks shifted most of its working from manual to computerize.

The management of banks also preferred to use technology to minimize the human element for various reasons 1) with of expansion in banking availability of skilled personnel became a constraints as well as expensive. As against this, innovation using technology looked more prudent approach, declining cost and 24/7 availability.

Technology also made data storage, transfer, sorting and updating much easier. For example same city clearing used to take more than couple of day. Similarly, if any one was traveling has to carry rupee denominated travelers cheque. Computerization and online banking has reduced this time significantly and most of the time transfers are instant.

The transformation of banking has been made possible by the revolutionary changes in the telecommunication technology. To begin with cost has been going down despite innovation and improvement in quality of services and widening rage of spectrum of services. Addition of wireless technology and use of broadband have yielded many advantages, reduction in cost, access to remotest areas and all weather services.

Added advantage is Internet, which allows the customers to access their accounts even when they are traveling including overseas travel. Cellular phone technology and growing number of subscribers enable the bank to conclude transaction, provide information at a nominal cost and restricting customer traffic into the branches.

The added advantage of computerization is "paperless" environment. On the one hand it reduces amount being spent of stationery and on the other hand warehousing cost for keeping record. Posting in ledgers was not only cumbersome but preparing periodical reports was expensive and time consuming exercise.

Most of the users of credit and debit cards and ATM machines may not know about the "information highway" created by the financial institutions. At the early stage each institution tried to develop it sown dedicated network but very soon it was realized that not only capital expenditure was high but maintaining the network was even more difficult.

Orix Leasing Company Pakistan first acquired the prevailing networks of different institutions and then created the information highway which is now being used by all the financial institutions, issuers of credit and debit cards and merchants. This has helped in bringing the cost per transaction to a very low level.

Technology may have brought convenience for those living in large cities but millions of people living in the rural areas just cannot think about using these services. Firstly, because of absence such facilities in these areas and secondly, because of low literacy level.

However, a solution has been found through introduction of biometric system. In certain transactions signature verification is mandatory and poses problem for those having no formal education. In the biometric system finger prints are used in lieu of signatures. This is an added security because forging signature is very easy but finding two people having the same finger prints are almost impossible.

As long as the boom in the computer and communication technologies goes on banks would remain the largest beneficiary.

If computer hardware revolution was driven by the micro processor, the revolution in banking would be driven by information technology and telecommunication.