Term Paper On Management Information System of Banking Sector in Bangladesh: A Case Study on Brac Bank Ltd.

Letter of Transmittal

Date: November, 2016

To

Md. Abdul Khaleque Sarker

Associate Professor, Management

Department of Management

Rajshai College, Rajshahi

Subject: Submission of Term Paper.

Dear Sir,

It is a great pleasure and privilege to present the term paper titled “Management Information System of Banking Sector in Bangladesh: A Case Study on Brac Bank Ltd.” which was assigned to me as a partial requirement for the competition of MBA .

Throughout the study I tried with the best of my capacity to accommodate as much information and relevant issues as possible and tried to follow the instructions as you have suggested. I tried my best to make this report as much informative as possible. I sincerely believe that it will satisfy your requirements. I however sincerely believe that this report will serve the purpose of my term paper of MBA .

My effort will be reworded only if it adds value to the research literature.  

Md. Matiur Rahaman

Master’s Final Year

Class Roll: 426025

Session: 2013-2014

Department Of Management

Rajshahi College, Rajshahi.

Student’s Declaration

I hereby declare that the Term Paper namely “Management Information System of Banking Sector in Bangladesh: A Case Study on Brac Bank Ltd.” by me after the completing inspection with Management Information System of Banking Sector in Bangladesh: A Case Study on Brac Bank Ltd. with a comprehensive study of the existing activities of sustainable Organization and its implementation.

I also declare that this term paper is my original worked and prepared for academic purpose which is a part of MBA and the term paper may not be used in actual study.

Md. Matiur Rahaman

Master’s Final Year

Class Roll: 426025

Session: 2013-2014

Department Of Management

Rajshahi College, Rajshahi

Supervisor’s Declaration

I hereby declare that the concerned Term Paper entitled “Management Information System of Banking Sector in Bangladesh: A Case Study on Brac Bank Ltd” is and original work by, Md. Matiur Rahaman; a student of MBA , Department of Management, Rajshahi College, Rajshahi has completed his term paper under my supervision and submitted for the partial fulfillment of the requirement of the degree of Master’s of Business Administration (MBA) at Rajshahi College, Rajshahi.

Md. Abdul Khaleque Sarker

Associate Professor, Management

Department of Management

Rajshai College, Rajshahi

Acknowledgement

It is the pleasure of the Term Paper team to offer sincerest and deepest gratitude to the NATIONAL UNIVERSITY, Gazipur (1704) authority. We would also like to express our heartiest thanks to our Course adviser Md. Abdul Khaleque Sarker (Associate Professor) Rajshahi College,Rajshahi  to give us the opportunity to study on Management Information System of Banking Sector in Bangladesh: A Case Study on Brac Bank Ltd.   and provide the guidance at every stage of the work.

Finally all credit goes to almighty Allah, who enables us to   complete the Term Paper work and submit the final Term Paper.

Md. Matiur Rahaman

Master’s Final Year

Class Roll: 426025

Session: 2013-2014

Department Of Management

Rajshahi College, Rajshahi

1.Introduction:

A management information system (MIS) provides information thatorganizations need to manage themselves efficiently and effectively. Management information systems are typically computer systems used for managing five primary components: hardware, software, data (information for decision making), procedures (design, development and documentation), and people (individuals, groups, or organizations). Management information systems are distinct from other information systems, in that they are used to analyze and facilitate strategic and operational activities.
(O’Brien, 1999)

BRAC Bank Limited is a scheduled commercial bank in Bangladesh. It established in Bangladesh under the Banking Companies Act, 1991 and incorporated as private limited company on 20 May 1999 under the Companies Act, 1994. BRAC Bank will be a unique organization in Bangladesh. The primary objective of the Bank is to provide all kinds of banking business. At the very beginning the Bank faced some legal obligation because the High Court of Bangladesh suspended activity of the Bank and it could fail to start its operations till 03 June 2001. Eventually, the judgment of the High Court was set aside and dismissed by the Appellate Division of the Supreme Court on 04 June 2001 and the Bank has started its operations from July 04, 2001.

Bank goal is to provide mass financing to enable mass production and mass consumption, and thereby contribute to the development of Bangladesh. BRAC Bank intends to set standard as the market leader in Bangladesh by providing efficient, friendly and modern fully automated online service on a profitable basis aiming at offering commercial banking service to the customers’ door around the country, BRAC Bank limited established 36 branches up-to this year.

This organization achieved customers’ confidence immediately after its establishment. Within this short time the bank has been successful in positioning itself as progressive and dynamic financial institution in the country. It is now widely acclaimed by the business community, from small entrepreneur to big merchant and conglomerates, including top rated corporate and foreign investors, for modern and innovative ideas and financial solution. Thus within this short time it has created a unique image for itself and innovated significant solutions to contribute in the banking sector of the country.

BRAC Bank Limited, with institutional shareholdings by BRAC, International Finance Corporation (IFC) and Shore cap International, has been the fastest growing Bank in 2004 and 2005. The Bank operates under a “Double Bottom Line” agenda where profit and social responsibility go hand in hand as it strives towards a poverty-free, enlightened Bangladesh.

A fully operational Commercial Bank, BRAC Bank focuses on pursuing unexplored market niches in the Small and Medium Enterprise Business, which hitherto has remained largely untapped within the country. In the last six years of operation, the Bank has disbursed over BDT 11,158.15 million in loans to nearly 60,000 small and medium entrepreneurs. The management of the Bank believes that this sector of the economy can contribute the most to the rapid generation of employment in Bangladesh. Since inception in July 2001, the Bank’s footprint has grown to 36 branches, 413 SME unit offices and 48 ATM sites across the country, and the customer base has expanded to 2,58,601 deposits around 2007. In the years ahead BRAC Bank expects to introduce many more services and products as well as add a wider network of SME unit offices, Retail Branches and ATMBRAC Bank, for the first time among local commercial banks, starts providing loan facilities to small and medium trading, manufacturing and service oriented enterprises all over the country.

1.1.Origin of study:

This report titled Application of Management Information Systems in BRAC Bank Ltd. has been prepared for Md. Abdul Khaleque Sarker, Course Instructor, Management Information Systems, as a partial requirement of the course.

1.2 Objective:

1.2.1 Broad Objective:

The broad objective of the report is to link between theoretical knowledge and practice in reality of the Management Information Systems course.

1.2.2 Specific Objective(s):

To know and understand the level of MIS that the organization has applied to determine how the BRAC Bank Ltd. has applied enterprise wide system. To determine how the Finance Department of BRAC Bank Ltd. has applied MIS to their organization. To know the challenges they are facing while implementing and working with MIS.

1.3 Scope:

This study looks into the present Management Information Systems of BRAC. Then the scope of the work focuses on different enterprise wide systems working in all the department  of BRAC bank. In doing so, the study includes different levels of MIS that are working at present. Furthermore, this study analyzes the challenges of implementing and working with MIS.

1.4 Limitation:

Time is the greatest limitation of this research. Another limitation is the availability of information. This kind of information is sensitive to the company and so may not be obtainable with ease. BRAC is a mammoth organization working in many different sectors successfully. The study includes only two different departments of BRAC. We can get a better picture if we would include all the departments. Moreover a comprehensive knowledge would be depicted we would have been compare several similar organization.

1.5 Methodology:

1.5.1 Research Design:

We conducted a descriptive research to correlate the theories of Management Information Systems with current practices.

1.5.2 Data collection Method:

We used only secondary data to conduct the study.

1.7 Secondary Data:

Secondary data are collected from-

Journals

Textbooks

 Articles

Publications

Websites

2. Literature Review:

Customer satisfaction and retention are critical for retail banks, as they have an impact on profit (Levesque and McDougall, 1996). However, as business leaders try to implement the concept of customer satisfaction and/or retention in their companies, employees working with customers may come to regard customer retention (Levesque and McDougall, 1996) or satisfaction (Stauss et al., 2001) as in themselves the goal of business. Regardless as to what business leaders may be trying to implement in their companies, any employee interacting with customers is in a position either to increase customer satisfaction, or put it at risk. Employees in such positions should therefore have the skills to respond effectively and efficiently to customer needs (Potter-Brotman, 1994).

Satisfaction is an “overall customer attitude towards a service provider” (Levesque and McDougall, 1996, p.14), or an emotional reaction to the differences between what customers anticipate and what they receive ( Zineldin, 2000), regarding the fulfillment of some need, goal or desire (Oliver, 1999)

A similar definition is provided by Gerpott et al. (2001) who propose that satisfaction is based on a customer’s estimated experience of the extent to which a provider’s services fulfill his or her expatiations.

Customer satisfaction brings many benefits. Satisfied customers are less price sensitive, buy additional products, are less influnced by competitors and stay loyal longer (Zineldin, 2000). Ovenden (1995) argues that organizations must be aware of how well or badly its customers are treated. Customers rarely complain, and when someone does, it might be too late to retain that that customer.

Satisfaction increases customer retention, and customer retention depends on the substance of the relationship between parties (Eriksson and Lofmarck Vaghult, 2000). Spreng et al. (1995) examine the importance of service recovery in determining overall satisfaction, arguing that a company is more likely to retain a customer encouraging complaints and then address them, then by assuming that the customer is satisfied.

Satisfied and properly served customers are more likely to return to an organization than are dissatisfied customers who could choose simply to go elsewhere (Ovenden, 1995).

In today’s business environment companies cannot afford to lose a single profitable customer. By effectively leveraging results from a customer satisfaction survey an organization can respond to their customer’s needs in ways that increase revenue as well as improve customer and employee, satisfaction and loyalty. Many companies perform customer satisfaction surveys, but don’t receive full value from their investments to administer the program. (Customer Centricity, Craig Bailly 2002)

3.Background of The Organization:

3.1 An Overview BRAC Bank Ltd.:

BRAC Bank Limited is a full service scheduled commercial bank. It has both local and International Institutional shareholder. The bank is primarily driven with a view of creating opportunities and pursuing market niches not traditionally meet by conventional banks. BRAC Bank has been motivated to provide “best-in-the-class” services to its diverse assortment of customers spread across the country under an on-line banking dais.

At present, BRAC Bank is one of the fastest growing banks in the country. In order to support the planned growth of its distribution, network and its various business segments, BRAC Bank is currently looking for impressive goal oriented, enthusiastic, individuals for various business operations.

The bank wants to build a profitable and socially responsible financial institution. It carefully listen to the market and business potentials, It is also assisting BRAC and stakeholders to build a progressive, healthy, democratic and poverty free Bangladesh. It helps make communities and economy of the country stronger and to help people achieve their financial goals. The bank maintains a high level of standards in everything for our customers, our shareholders, our acquaintances and our communities upon, which the future affluence of our company rests.

According to the Half-Yearly Financial Statement of 2010- the number of Employees including contractual engaged for the whole year or part there of (who received a total yearly remuneration of Tk. 36,000 or above) were 6,306 where as the total number of employees were 7,075 as the same period of pervious year.

3.1.1 History:

BRAC Bank Limited, with institutional shareholdings by BRAC, International Finance Corporation (IFC) and Shorecap International, has been the fastest growing Bank in 2004 and 2005. The Bank operates under a “double bottom line” agenda where profit and social responsibility go hand in hand as it strives towards a poverty free, enlightened Bangladesh.

A fully operational Commercial Bank, BRAC Bank focuses on pursuing unexplored market niches in the Small and Medium Enterprise Business, which hitherto has remained largely untapped within the country. In the last five years of operation, the Bank has disbursed over BDT 1500 crore in loans to nearly 50,000 small and medium entrepreneurs. The management of the Bank believes that this sector of the economy can contribute the most to the rapid generation of employment in Bangladesh.

BBL started off in July 2001, and has now grown to 26 branches, 368 SME unit offices and 54 ATM sites across the country, and the customer base has expanded to 200,000 deposit and 45,000 advance accounts through 2006. In the years ahead BRAC Bank expects to introduce many more services and products as well as add a wider network of SME unit offices, Retail Branches, POS and ATMs across the country.

3.1.2 Vision:

The vision of BBL is- Building a profitable and socially responsible financial institution focused on Markets and Business with growth potential, thereby assisting BRAC and stakeholders build a "just, enlightened, healthy, democratic and poverty free Bangladesh"..

3.1.3 Mission:

BRAC Bank Limited wants to be the absolute market leader in the number of loans given to small and medium sized enterprises, service holders, teachers, students, immigrants and people belong to all income and professional groups throughout Bangladesh. It tries to be a world-class organization in terms of service quality and establishing relationships that help its customers to develop and grow successfully. It wants to become the Bank of choice both for its employees and its customers, the model bank in this part of the world. The missions that BBL follows are-

·          Sustained growth in 'Small & Medium Enterprise' sector.

      ·          Continuous low cost deposit growth with controlled growth in Retained Assets.

      ·          Corporate Assets to be funded through self-liability mobilization. Growth in Assets through Syndications and Investment in faster growing sectors.

     ·          Continuous endeavor to increase fee based income.

     ·          Keep Debt Charges at 2% to maintain a steady profitable growth.

     ·          Achieve efficient synergies between the bank's Branches, SME Unit Offices and BRAC field offices for delivery of Remittance and Bank's other products and services.

     ·          Manage various lines of business in a fully controlled environment with no compromise on service quality.

     ·          Keep a diverse, far flung team fully motivated and driven towards materializing the bank's vision into reality.

3.1.4 Objectives:

The objective of BRAC Bank Limited is specific and targeted to its vision and to position itself in the mindset of the people as a bank with difference. The objective of BRAC Bank Limited is as follows:

Building a strong customer focus and relationship based on integrity, superior service.

►To finance the industry, trade and commerce in both the conventional way and by offering customer friendly credit service.

►To encourage the new entrepreneurs for investment and thus to develop the country’s industry sector and contribute to the economic development.

►To work as a team to serve the best interest of our owners

►To develop the standard of living of the limited income group by providing Consumer Credit.

►To base recognition and reward on performance

►To responsible, trustworthy and law-abiding in all that we do

►To mobilize the savings and channeling it out as loan or advance as the company approve.

►To establish, maintain, carry on, transact and undertake all kinds of investment and financial business including underwriting, managing and distributing the issue of stocks, debentures, and other securities.

3.2 Functional Units:

BRAC Bank has a centralized banking structure through online banking system that resembles the ABN.AMRO Model. Overall, BRAC Bank is divided into three major units – business unit, operations unit and support unit. All the functional divisions are discussed below. Besides these divisions, there is another support division for infrastructural support of BBL – Channel Infrastructure Development and one more operations divisions – General Infrastructure Services. Among the functional units only five are business units and the rest work as support units. They are:

Small and Medium Enterprise
Retail Banking
Corporate Banking
Probashi Banking
Cards

.

3.2.1 Small and Medium Enterprise:

The biggest operational division of BRAC bank is the SME (Small & Medium Enterprise) Division. SME is directly related to business of the bank. BRAC Bank extends loans to potential small and medium trading, manufacturing and service enterprises. This loan is able to provide quick and quality banking services to targeted business at any places of the country. Potential women entrepreneurs will also get the facilities of SME loan; this initiation is to play a role in the socioeconomic development of the country by expansion of business as well as creation of employment. BRAC Bank was titled to be the fastest growing bank in 2004 & 2005, and it had a profit of 14 crore taka. The profitability of the bank came mostly from the SME sector. SME division is enriched with more than 700 staffs and it has 367 unit offices all over the country.

3.2.2 Retail Banking:

Retail Banking is known as general banking where the individual customers get services time to time from the local branches of the larger commercial banks. In BRAC Bank Retail section has been divided into four parts –

Distribution – Serve the acquired customers
Sales – Business acquisition.
Non Funded Business, Alternate Delivery Channels, Priority Banking
Phone Banking

They are interdependent and work closely with each other. Retail offers different types of competitive banking products to the customers. The retail division of the BRAC Bank also offers some special types of deposits and loan scheme for the customer attention.

3.2.3 Corporate Banking:

Corporate department has also two different wings – Corporate Banking division & Cash Management. Corporate Banking is a specialized area of BRAC Bank, which addresses the diverse financial needs of Corporate Clients. This division exists to provide banking services and financial partnership with local and foreign business houses (Public and Private Limited Companies), NGO’s, trading houses, joint ventures and various government bodies/corporations etc. As the financial partner of choice for the corporate sector, BRAC Bank wants to be distinguished by its:

Quality of service
Value of innovative solutions
Level of trust with clients
Customer knowledge

3.2.4 Probashi Banking:

This offers an array of products and services that are targeted towards the nonresident Bangladeshis living in different parts of the world, a milestone for BRAC bank as to becoming the pioneer in such operation. The official launching of Probashi Subidha Account took place on 16 January 2007 with a prospective to catering the beneficiaries of NRB customers with their different banking needs.

With a goal to provide fast and expeditious services to deliver remittances even in the most remote corner of Bangladesh, the network of electronically connected field offices have been expanded more than 1200 BDP outlets across the country for remittance payment. In 2007 the remittance services has turned out to be one of the core business areas of the Bank. The year remained as a rewarding and successful one in terms of new tie-ups and partnerships with a focus on pursuing unexplored and niche markets around the world.

3.2.5 Cards:

February 6th 2007 marks the beginning of BRAC Bank’s Credit Cards business. Being the latest entrant into the cards market, the card division’s greatest challenge was to establish itself in an already demanding marketplace and create its own niche. In a space of one year, BRAC Bank’s today has become the fastest growing issuers of credit cards in Bangladesh. Staying true to its motto of being the banks of the masses BRAC Banks has successfully managed to penetrate and enlist a large segment of the middle class society who has adopted the plastic card as part of their everyday life. With an aim to becoming the Credit Card of choice, regular product innovations and value added services round the year ensured acquisition of new users and also aided in retention of existing clients. Aggressive promotional and brand building campaigns have created a niche that serves to distinguish BRAC Bank Credit Card from the competition. Apart from these five business units, BBL has other support units, which provide the functional assistance to smoothly run the business.

These are:

Treasury & Financial Institutions
Central Operations
Enterprise Risk Management
Financial Administration
General Infrastructure Services
Credit
Consumer Service Delivery (CSD)
Impaired Assets Management
Information Technology
PSRM
Human Resources
Marketing & Corporate Affairs
Company Secretariat

4.Findings and Analyses:

The bank is using the Information System very efficiently and increasing its profitability, but still there are many things that should be improved. Its mainly customized by their own employees.

That’s why it takes low level responsibilities. Management cannot use this software for 

market analysis, hypothesis testing or client segmentation. However this software has some new features, but that should be more developed. Using of this software is rarely new. So, it needs more time to make itself as an international standard.

BBL use high range software but skilled technicians are not available in Bangladesh.

For any kind of software problem bank has to contact with a software company which located in other country. Which hamper the banking system.

The network frequency in Bangladesh is not good. Some time it dose not works.

Fiber optical is not fully operated in Bangladesh. so sometimes the server does not work.

If the server does not work the ATM network is stopped.

In some banks’ prediction is wrong.

In some case planning is wrong.

The present software is not capable to store huge volume of data.

BBL has 12 luck clients but the software capable to store only 3 to 4 luck client data.

Presently bank operates their activity by increasing RAM.

5.Conclusion:

A management information system is a system or process that provides the information necessary to manage an organization effectively. MIS and the information it  generates are generally considered essential components of prudent and reasonable business decisions. The reports start with the background history of the bank such as when it establish in Bangladesh, the branches, pre and post era etc. It explains all the TPS how the transactions are made by the bank, using of these TPS from the new events such as account opening, new allowances etc to the routine work including cash and payments record, updating of records, payroll and the processing of the complaints. These TPS holds all the activities from the manager and employees to the customers. The report discuses the inbound and the outbound logistics and relate all the processes of TPS used in the bank with the MIS, enabling the bank to provide the quality and satisfactory services to their customers. Also includes the inter relations, of all the entities in the database of the bank. ERD diagram represents all these relations.

Initially in businesses and other organizations, internal reporting was produced manually and only periodically, as a by-product of the accounting system and with some

additional statistic(s), and  gave limited and delayed information on management  performance. Data was organized manually according to the requirements and necessity of the organization. As computational technology developed, information

began to be distinguished from data and systems were developed to produce and organize abstractions, summaries, relationships and generalizations based on the data.

Initially in businesses and other organizations, internal reporting was produced manually and only periodically, as a by-product of the accounting system and with some

Finally, a system of secure communication which allows you to exchange private information, confirm appointments, and extend personal advice in an environment  akin to an online safety deposit box is the new wave. You can ensure the protection of personal and private information all with the convenience and ease of email–but it is

Not  email. It’s secure. A feature like this is well worth checking out.

6. Recommendation:

However the satisfaction level of BRAC Bank is good enough. But some customers have expressed their dissatisfaction about the BRAC bank in various aspects. It has a profound effect on the overall satisfaction level of the bank. The following are some recommendations for the company:

1.    Bank has to satisfy its customer at any cost. Even if the customer is wrong in that case also, even then the officers should not make any rough behave to the

Customer. Because customers are everything for a bank. The employee of BBL should show a sincere interest in solving the customer’s problem.

2.    For maintaining the relationship with the customer, employees have to give all types of support to the customers.

3.    Officials should be more cooperative with the clients.

4.    Officials should be faster during transaction.

5.    There are a lot of banks now in Bangladesh and customers now have lots of options. So a bank should do everything possible for them to do to retain its customer.

6.    Bank should be more innovative and diversified in its services.

7.    Some customers said that the service charges of BRAC bank are comparatively higher than other bank so it should be reduced if possible. Otherwise it can be a threat for the bank in future.

8.    company should ensure greater CSR activities for the purpose of general people.

7.References:

BRAC Bank Ltd. (2016, November 30).

BRAC Bank Ltd. about us Retrieved from https://www.linkedin.com/company/brac-bank-ltd-

 Lucey, T. (2005).

Management Information Systems.

London: Thomson.

O‟Brien, J. (1999). management Information Systems –

Managing InformationTechnology in the Internetworked Enterprise. Boston: McGraw-Hill.

Wikipedia. (2016, October 30).

BRAC Bank Ltd Retrieved from https://en.wikipedia.org/wiki/BRAC_Bank