Internet Banking in Maldives the Challenges and Treats

Summary

* Internet banking in Maldives the challenges and treats.

* BML and SBI taken as example

Introduction

The Maldives is an archipelago comprising 1,190 low-lying coral islands scattered across the equator, in groups of 26 naturally occurring atolls which are divided into 20 for administrative purposes (The Maldives Islands, 2008).

Tourism is the largest industry in the Maldives, accounting for 28% of GDP, and fishing is the next largest industry in Maldives (Maldives:Wikipedia).

The information technology (IT) is becoming an important factor in the future development of financial sector and particularly in the banking industry. The leading banks in Maldives, Bank of Maldives (BML) and State Bank of India (SBI), have invested heavily to develop banking IT infrastructure (check financial statements last three years). The major reason for investing IT infrastructure is because of intense competition in the financial services sector has forced even the most reluctant institution to analyze the opportunities offered by new technologies in the delivery of financial products. Nevertheless, their role is not always clear. Many stress the potential for service quality improvement, while others consider it as a cost effective means to achieve geographical expansion (Filotto, Tanzi, & Saita, 1997).

With the advancement in IT we can see that the banks are moving from the old brick and motor to more virtual since banking services are available online through net banking. According to the data available world has 1.9 billion internet users against the world population of 6.8 billion (World Internet Usage Statistics).

Coming further down if we analyze Maldives, we have the population of 395650 people and latest data show that only 87900 people are using the internet which mean only 22.2% of the population are being used by the internet. So the remaining 77.8% people are not using the internet, which again the financial institution needs to take into accounts (World Internet Usage Statistics). It's a big challenge for the bank.

In this paper we have looked at the challenges and threats of Internet banking, and for the context we have looked upon BML and SBI as an example.

Background of the organizations

Bank of Maldives

Bank of Maldives started commercial operation as a joint venture bank with 60% shares held by the Government of the Maldives on November 11, 1982. Currently the Bank of Maldives has 25 branches across Maldives distributed amongst the atolls of the country, each with a designated command area, reaching out the scattered population in the islands (Company Background).

On 14th August 2007, BML started the 'Maldives Internet Banking and Bill Pay' as a service to its customers to check their account statements and execute various transactions online (Miadhu News, 2007). As in the end of 2009 there were 9610 internet banking customers (BML, 2009). According to the interview we have conducted, the bank claims that there are around approximately 15000 customers availing this service (Shareef, 2010).

BML offers two packages for its customers which are Standard Plan and Premium Plan. The Standard Plan is without a Security Token or third party payments, and with a maximum daily limit of Rf. 10,000/- for different transaction types without any annual fees. The Premium Plan is with Security Token and third party payments, and with the option of setting higher daily limits with an annual fee of Rf. 1,800/-.

The current services with BML internet banking are as follows:

* View account balances and transactions.

* View account and credit card history of the one year.

* View status of issued cheques

* Request for a stop payment of a cheque if not yet presented.

* Transfer funds between accounts.

* Make payments to loans.

* Make payments to credit cards.

* Make payments to other BML customers as well as local and overseas banks.

* Pay bills through BILLPAY service.

* Request for cheque book and account statement.

* Request Upload a payroll file

* Activate or report lost or stolen debit and credit card.

State Bank of India

SBI started commercial operation on February 4, 1974. Currently the Bank of Maldives has 25 branches across Maldives distributed amongst the atolls of the country, each with a designated command area, reaching out the scattered population in the islands (Company Background).

On 14th August 2007, BML started the 'Maldives Internet Banking and Bill Pay' as a service to its customers to check their account statements and execute various transactions online (Miadhu News, 2007). As in the end of 2009 there were 9610 internet banking customers (BML, 2009). According to the interview we have conducted, the bank claims that there are around approximately 15000 customers availing this service (Shareef, 2010).

BML offers two packages for its customers which are Standard Plan and Premium Plan. The Standard Plan is without a Security Token or third party payments, and with a maximum daily limit of Rf. 10,000/- for different transaction types without any annual fees. The Premium Plan is with Security Token and third party payments, and with the option of setting higher daily limits with an annual fee of Rf. 1,800/-.

The current services with BML internet banking are as follows:

* View account balances and transactions.

* View account and credit card history of the one year.

* View status of issued cheques

* Request for a stop payment of a cheque if not yet presented.

* Transfer funds between accounts.

* Make payments to loans.

* Make payments to credit cards.

* Make payments to other BML customers as well as local and overseas banks.

* Pay bills through BILLPAY